-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, We6p9+TbtL4WvBxWQJrRR2xPns2UPAktGhBa6djRdnb3R7qyjV5cWxqgQbdhX9q5 zLb7PGQE9FVZw9pm/VFN5w== 0000949377-03-000018.txt : 20030123 0000949377-03-000018.hdr.sgml : 20030123 20030123170623 ACCESSION NUMBER: 0000949377-03-000018 CONFORMED SUBMISSION TYPE: N-14/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20030123 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOENIX EDGE SERIES FUND CENTRAL INDEX KEY: 0000792359 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-14/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-102098 FILM NUMBER: 03522778 BUSINESS ADDRESS: STREET 1: 101 MUNSON ST CITY: GREENFIELD STATE: MA ZIP: 01302 BUSINESS PHONE: 8004474312 MAIL ADDRESS: STREET 1: ONE AMERICAN ROW STREET 2: PO BOX 5056 CITY: HARTFORD STATE: CT ZIP: 06102-5056 FORMER COMPANY: FORMER CONFORMED NAME: BIG EDGE SERIES FUND DATE OF NAME CHANGE: 19920304 N-14/A 1 pesf58665-n14a.txt As filed with the Securities and Exchange Commission on January 23, 2003 Registration Nos. 333-102098 =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- FORM N-14 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X] Pre-Effective Amendment No. 1 [ ] Post-Effective Amendment No. ___ --------------------- THE PHOENIX EDGE SERIES FUND (Exact Name of Registrant as Specified in Charter) --------------------- c/o Variable Products Operations Phoenix Life Insurance Company 101 Munson Street, Greenfield, Massachusetts 01301 (Address of Principal Executive Offices) (800) 541-0171 (Registrant's Telephone Number, including Area Code) --------------------- Matthew A. Swendiman, Esq. c/o Phoenix Life Insurance Company One American Row, Hartford, Connecticut 06102-5056 (Name and address of Agent for Service) --------------------- Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this Registration Statement. --------------------- Registrant is relying on Section 24(f) of the Investment Company Act of 1940, as amended, which permits registration of an indefinite number of shares of beneficial interest. Accordingly, no filing fee is due in connection with this Registration Statement. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ================================================================================ THE PHOENIX EDGE SERIES FUND CROSS REFERENCE SHEET Pursuant to Rule 481(a)
Caption or Location in Form N-14 Item No. and Caption Prospectus/Proxy Statement - ------------------------------ -------------------------- Part A Information Required in Prospectus/Proxy Statement - ------ 1. Beginning of Registration Statement Cover Page; Cross Reference Sheet and Outside Front Cover Page of Prospectus 2. Beginning and Outside Back Cover Table of Contents Page of Prospectus 3. Fee Table, Synopsis Information and Risk Synopsis; Principal Risk Factors; Comparison of Factors Investment Objectives and Policies 4. Information about the Transaction Synopsis; The Proposed Reorganization; Comparative Information on Shareholder Rights; Appendices A and B (Form of Agreement and Plan of Reorganization) 5. Information about the Registrant Cover Page; Synopsis; Principal Risk Factors; Comparison of Investment Objectives and Policies; The Proposed Reorganization; Comparative Information on Distribution Arrangements; Comparative Information on Shareholder Services; Comparative Information on Shareholder Rights; Management and Other Service Providers; Additional Information About The Series; Current Prospectus of Registrant 6. Information about the Company Being Synopsis; Comparison of Investment Objectives Acquired and Policies; The Proposed Reorganization; Comparative Information on Distribution Arrangements; Comparative Information on Shareholder Services; Comparative Information on Shareholder Rights; Additional Information About The Series; Prospectus of the Registrant dated August 9, 2002, as supplemented 7. Voting Information Synopsis; The Proposed Reorganization; Comparative Information on Shareholder Rights; Voting Information 8. Interest of Certain Persons and Experts The Proposed Reorganization 9. Additional Information Required for Not Applicable Re-offering By Persons Deemed to be Underwriters Caption or Location in Form N-14 Item No. and Caption Prospectus/Proxy Statement - ------------------------------ -------------------------- Part B: Information Required in Statement of Additional Information 10. Cover Page Cover Page 11. Table of Contents Table of Contents 12. Additional Information about the Registrant Cover Page; Statement of Additional Information of Registrant, dated August 9, 2002 13. Additional Information about the See item 12 Company Being Acquired 14. Financial Statements Annual Report of the Registrant for the year ended December 31, 2001; Semiannual Report of the Registrant for the six-month period ended June 30, 2002; and Pro Forma Financial Statements Part C: Other Information 15. Indemnification Indemnification 16. Exhibits Exhibits 17. Undertakings Undertakings
PART A PHOENIX-VAN KAMPEN FOCUS EQUITY SERIES PHOENIX-MFS INVESTORS GROWTH STOCK SERIES EACH A SERIES OF THE PHOENIX EDGE SERIES FUND C/O PHOENIX VARIABLE PRODUCTS MAIL OPERATIONS P.O. BOX 8027 BOSTON, MA 02266-8027 (800) 541-0171 -------------------------- January 23, 2003 Dear Contract/Policyholder: The Phoenix-Van Kampen Focus Equity Series and Phoenix-MFS Investors Growth Stock Series (collectively the "Merging Series"), each a series of The Phoenix Edge Series Fund (the "Trust"), will hold a Special Meeting of Shareholders at 10:00 a.m., local time, on February 14, 2003, at One American Row, Hartford, Connecticut. At the meeting, Phoenix Life Insurance Company ("PLIC") and its insurance companies (collectively "Phoenix") will vote on Agreements and Plans of Reorganization (collectively the "Reorganization Agreements") under which the Merging Series will be combined with the Phoenix-Janus Growth Series (the "Surviving Series"), another series of the Trust. The Phoenix Janus Growth Series would then be renamed Phoenix-MFS Investors Growth Stock Series upon consummation of the reorganizations. The Surviving Series has a similar investment objective to those of the Merging Series. If the Reorganization Agreements are implemented, the separate accounts holding shares of the Merging Series will receive shares of the Surviving Series with an aggregate value equal to the aggregate net asset value of your investment in the Merging Series. No sales charge will be imposed in connection with the Reorganization. PLIC will pay all costs of the Reorganization. The Reorganization will be conditioned upon receipt by the Trust of an opinion of counsel indicating that the Reorganization will qualify as a tax-free reorganization for federal income tax purposes. The Board of Trustees of the Trust believes that the Reorganization offers you the opportunity to pursue your goals in a larger fund. The Board of Trustees, acting by and through the Executive Committee of the Board of Trustees has carefully considered and has unanimously approved the proposed Reorganization, as described in the accompanying materials, and believes that the Reorganization is in the best interests of the Merging Series and its shareholders. As an owner of a variable annuity or variable life insurance contract issued by Phoenix, you have the contractual right to instruct the insurance company how to vote the shares of the Merging Series at this meeting. Although you are not directly a shareholder of the Merging Series, some of your contract value is invested in the Merging Series pursuant to your policy or contract. For the limited purposes of this prospectus and proxy statement, the term "shareholder" refers to you as the Contract and Policyowners, unless the context otherwise requires. Therefore, the Board of Trustees recommends that you vote in favor of the Reorganizations. It is very important that you vote and that your voting instruction card be received no later than February 14, 2003. If the voting instructions card is executed and no direction is made, you will be considered as voting FOR the proposal and, in the discretion of the insurance company, upon such other business as may properly come before the Special Meeting. We have enclosed a copy of the Notice of Special Meeting of Shareholders and Proxy Statement and a card entitled "Voting Instructions." It is important for you to provide voting instructions with respect to the issues described in the accompanying Prospectus/Proxy Statement. We recommend that you read the Proxy Statement in its entirety as the explanations will help you to decide what voting instructions you would like to provide. Voting instructions executed by you may be revoked at any time prior to Phoenix voting the shares represented thereby by your providing Phoenix with a properly executed written revocation of such voting instructions, or by your providing Phoenix with proper later dated voting instructions by telephone or by the Internet. As a convenience, you can provide voting instructions in any one of four ways: Through the Internet - www.proxyweb.com By telephone - (800) 690-6903 By mail - USING THE ENCLOSED VOTING INSTRUCTIONS CARD(S) AND POSTAGE PAID ENVELOPE In Person - AT THE SPECIAL MEETING YOUR VOTE ON THESE MATTERS IS IMPORTANT. PLEASE COMPLETE EACH VOTING INSTRUCTIONS CARD AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED OR VOTE USING ONE OF THE OTHER METHODS DESCRIBED. PLEASE RESPOND. IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK THAT YOU VOTE PROMPTLY. IT IS IMPORTANT THAT YOUR POLICY OR CONTRACT BE REPRESENTED. Sincerely, Simon Y. Tan President PHOENIX-VAN KAMPEN FOCUS EQUITY SERIES PHOENIX-MFS INVESTORS GROWTH STOCK SERIES EACH A SERIES OF THE PHOENIX EDGE SERIES FUND 101 MUNSON STREET GREENFIELD, MASSACHUSETTS 01301 -------------------------- NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD FEBRUARY 14, 2003 -------------------------- To The Contract and Policy Holders: The Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series, each a series of The Phoenix Edge Series Fund (the "Trust"), a Massachusetts business trust, will hold a Special Meeting of Shareholders at One American Row, Hartford, Connecticut on February 14, 2003 at 10:00 a.m., local time, for the following purposes: FOR THE PHOENIX-VAN KAMPEN FOCUS EQUITY SERIES: 1. To consider and act upon a proposal to approve the Agreement and Plan of Reorganization, dated February 14, 2003, and the transactions it contemplates, including (a) the transfer of all of the assets of the Phoenix-Van Kampen Focus Equity Series (the "Phoenix-Van Kampen Focus Equity Series") to the Phoenix-Janus Growth Series (the "Surviving Series"), another series of the Trust, in exchange solely for shares of the Surviving Series and the assumption by the Surviving Series of all known liabilities of the Phoenix-Van Kampen Focus Equity Series, and (b) the distribution of the shares of the Surviving Series so received to shareholders of the Phoenix-Van Kampen Focus Equity Series in complete liquidation of the Phoenix-Van Kampen Focus Equity Series. FOR THE PHOENIX-MFS INVESTORS GROWTH STOCK SERIES: 2. To consider and act upon a proposal to approve the Agreement and Plan of Reorganization, dated February 14, 2003, and the transactions it contemplates, including (a) the transfer of all of the assets of the Phoenix-MFS Investors Growth Stock Series (the "Phoenix-MFS Investors Growth Stock Series") to the Phoenix-Janus Growth Series (the "Surviving Series"), another series of the Trust, in exchange solely for shares of the Surviving Series and the assumption by the Surviving Series of all known liabilities of the Phoenix-MFS Investors Growth Stock Series, and (b) the distribution of the shares of the Surviving Series so received to shareholders of the Phoenix-MFS Investors Growth Stock Series in complete liquidation of the Phoenix-MFS Investors Growth Stock Series. 3. To consider and act upon any other business as may properly come before the meeting and any adjournments thereof. The Board of Trustees of the Trust has fixed the close of business on December 20, 2002, as the record date for determining shareholders entitled to notice of, and to vote, at the Special Meeting and any adjournment or postponement thereof. You are cordially invited to attend the Special Meeting. Contract and Policyowners who do not expect to attend the Special Meeting are asked to respond promptly via Internet, telephone or by returning a completed voting instructions card. The enclosed proxy is being solicited by the Board of Trustees of the Trust. By Order of the Board of Trustees of The Phoenix Edge Series Fund, RICHARD J. WIRTH SECRETARY Hartford, Connecticut January 23, 2003 PHOENIX-VAN KAMPEN FOCUS EQUITY SERIES PHOENIX-MFS INVESTORS GROWTH STOCK SERIES EACH A SERIES OF THE PHOENIX EDGE SERIES FUND 101 MUNSON STREET GREENFIELD, MASSACHUSETTS 01301 PROSPECTUS/PROXY STATEMENT DATED JANUARY 23, 2003 The Phoenix Edge Series Fund (the "Trust"), a Massachusetts business trust, serves as an investment vehicle for use in connection with variable life insurance policies and variable annuity contracts (collectively, "Contracts") issued by Phoenix Life Insurance Company and its affiliated insurance companies (together, "Phoenix") and their separate accounts. Phoenix and the separate accounts are the sole shareholders of record of the Trust. This Prospectus/Proxy Statement is being furnished in connection with the solicitation of proxies by the Board of Trustees of the Trust, for use at the special meeting of shareholders of the Phoenix-Van Kampen Focus Equity Series (the "Phoenix-Van Kampen Focus Equity Series") and shareholders of the Phoenix-MFS Investors Growth Stock Series (the "Phoenix-MFS Investors Growth Stock Series") and, together with the Phoenix-Van Kampen Focus Equity Series, the "Merging Series" to be held at 10:00 a.m., local time, on February 14, 2003, at the offices of the Phoenix Life Insurance Company located at One American Row, Hartford, Connecticut, and at any adjournment(s) thereof. The purpose of the meeting is to consider approval of: (1) an Agreement and Plan of Reorganization that would effect the reorganization of the Phoenix-Van Kampen Focus Equity Series into the Phoenix-Janus Growth Series (the "Surviving Series"), another series of the Trust, and (2) an Agreement and Plan of Reorganization that would effect the reorganization of the Phoenix-MFS Investors Growth Stock Series into the Surviving Series, as described below. Under each respective reorganization agreement, all of the assets of the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series would be transferred to the Surviving Series in exchange solely for shares of beneficial interest in the Surviving Series and the assumption by the Surviving Series of all known liabilities of each respective Merging Series. Shares of the Surviving Series would then be distributed pro rata to the separate accounts of the insurance companies then holding shares of the respective Merging Series, and then the respective Merging Series would be liquidated. As a result of the proposed transactions, said separate accounts would receive a number of full and fractional shares of the Surviving Series with an aggregate net asset value equal to the aggregate net asset value of the respective Merging Series shares on the effective date of the reorganization. Immediately prior to the proposed shareholder vote, Phoenix Variable Advisors, Inc. ("PVA"), the adviser to the Merging Series and the Surviving Series intends to use the powers authorized pursuant to the Securities and Exchange Commission's ("SEC") exemptive order permitting PVA to replace Janus Capital Management LLC ("Janus") with Massachusetts Financial Services Company, Inc., doing business as MFS Investment Management ("MFS") as sub-adviser for the Surviving Series. Subject to legal constraints, MFS would then manage the Surviving Series in a manner comparable with the principal strategies currently being used for the Phoenix-MFS Investors Growth Stock Series, all as more particularly described in the Trust's current registration statement. PVA and MFS have also agreed that they would serve as adviser and sub-adviser to the Surviving Series, respectively, for the same investment management fees as are currently charged to the Phoenix-MFS Investors Growth Stock Series. Accordingly, the annual expenses and expense cap reimbursements for the Surviving Series would be the same as those pertaining to the Phoenix-MFS Investors Growth Stock Series. As part of the Reorganizations, the Phoenix-Janus Growth Series would then be renamed the Phoenix-MFS Investors Growth Stock Series. 1 The Surviving Series and each of the Merging Series are series of the same open-end management investment company. The Surviving Series has an investment objective of long-term growth of capital in a manner consistent with the preservation of capital. The Phoenix-Van Kampen Focus Equity Series has an investment objective of capital appreciation by investing primarily in equity securities. The Phoenix-MFS Investors Growth Stock Series has an investment objective of long-term growth of capital and future income rather than current income. PVA is the investment adviser to the Surviving Series and each of the Merging Series. Janus is currently the sub-adviser to the Surviving Series. Morgan Stanley Investment Management Inc. ("MSIM"), is the sub-adviser to the Phoenix-Van Kampen Focus Equity Series, and MFS is the sub-adviser to the Phoenix-MFS Investors Growth Stock Series. This Prospectus/Proxy Statement, which you should retain for future reference, sets forth concisely the information that you should know about each Merging Series, the Surviving Series, and the transactions contemplated by the reorganization agreements, before you vote on the proposed reorganizations. As used in this Prospectus/Proxy Statement, the term "Series" collectively refers to the Phoenix-Van Kampen Focus Equity Series, the Phoenix-MFS Investors Growth Stock Series and the Surviving Series. The term "Merging Series" collectively refers to the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series. A Prospectus, as supplemented, and a Statement of Additional Information ("SAI") as supplemented, for the Series dated August 9, 2002 (Registration No. 33-5033), have been filed with the SEC and are incorporated by reference in this Prospectus/Proxy Statement. Copies of the above-referenced documents are available upon written or oral request and without charge by contacting Phoenix Variable Products Mail Operations, P.O. Box 8027, Boston, Massachusetts 02266-8027, or by calling toll-free at 1-800-541-0171. The Trust files reports, proxy materials and other information with the SEC. Information about the Trust, including the SAI, can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room by calling the SEC at (202) 942-8090. Reports and other information about the Trust are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov. Copies of the information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC Public Reference Section, Washington, D.C. 20549-0102. ----------------- This Prospectus/Proxy Statement constitutes the proxy statement of the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series for the meeting and the prospectus for shares of the Surviving Series that have been registered with the SEC and are being issued in connection with the reorganization. This Prospectus/Proxy Statement is expected to first be sent to shareholders on or about January 23, 2003. THE SECURITIES OF THE SURVIVING SERIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE SEC DETERMINED IF THIS PROSPECTUS/PROXY STATEMENT IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ----------------- 2 TABLE OF CONTENTS Page ---- SYNOPSIS................................................................... 4 PRINCIPAL RISK FACTORS..................................................... 9 THE PROPOSED REORGANIZATIONS............................................... 13 COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES........................... 18 COMPARATIVE INFORMATION ON DISTRIBUTION ARRANGEMENTS....................... 22 COMPARATIVE INFORMATION ON SHAREHOLDER SERVICES............................ 22 COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS.............................. 22 FISCAL YEAR................................................................ 23 MANAGEMENT AND OTHER SERVICE PROVIDERS..................................... 24 VOTING INFORMATION......................................................... 24 ADDITIONAL INFORMATION ABOUT THE SERIES.................................... 27 MISCELLANEOUS.............................................................. 27 SURVIVING SERIES FINANCIAL HIGHLIGHTS...................................... 31 OTHER BUSINESS............................................................. 32 APPENDIX A................................................................. A-1 APPENDIX B................................................................. B-1 3 SYNOPSIS BACKGROUND The proposed reorganizations are the outcome of deliberations by the Board of Trustees of the Trust (the "Trustees"). At the regularly scheduled meeting of the Trustees on November 12, 2002, the following Series mergers were approved subject to a vote of shareholders: Merged Series Surviving Series - ------------- ---------------- Phoenix-Van Kampen Focus Phoenix-MFS Investors Growth Equity Series Stock Series Phoenix-Janus Growth Series Management recommended that the Trustees consider the benefits that the Series' shareholders would realize if each of the Merging Series were to be combined with the Surviving Series. In response to its recommendation, the independent trustees of the Trust requested that management outline specific reorganization proposals for their consideration and provide an analysis of the specific benefits that shareholders would realize from each proposal. Independent trustees are Trustees who are not "interested persons" of the Trust (as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the "1940 Act")). Upon further analysis and consideration, after the Board meeting, it was determined that the approved mergers should not be completed as previously proposed due to the similarities of investment styles of each series and the relative size of Phoenix-MFS Investors Growth Stock Series. Consequently, Management sought the consideration and approval of the Executive Committee of the Board of Trustees of the Trust on December 10, 2002 for the following revised proposal: Merged Series Surviving Series - ------------- ---------------- Phoenix-Van Kampen Focus Phoenix-Janus Growth Series Equity Series Phoenix-MFS Investors Growth Stock Series The Executive Committee of the Board of Trustees unanimously approved this revised reorganization proposal, recognizing that, this method of reorganization allows for the largest of the three affected series (Phoenix-Janus Growth Series) to serve as the accounting, legal and performance survivor. The final result, like the proposal previously approved by the Board, combines the three affected series into a single series ultimately managed by MFS. Management will seek ratification from the entire Board of Trustees at the regularly scheduled Board of Trustees meeting on February 10, 2003, before completing this reorganization. Consequently, your vote is predicated on the approval of the reorganization by the requisite number of Trustees at this Board Meeting. SUMMARY OF THE PROPOSED REORGANIZATIONS The reorganizations will be effected in accordance with the terms of a reorganization agreement, forms of which are attached to this Prospectus/Proxy Statement as Appendices A and B. The reorganization agreements provide for: o the acquisition of all of the assets of the Merging Series by the Surviving Series in exchange solely for shares of beneficial interest in the Surviving Series; o the assumption by the Surviving Series of all known liabilities of each Merging Series; o the pro rata distribution of the Surviving Series shares to each applicable Merging Series shareholders in exchange for the outstanding Merging Series shares; 4 o the complete liquidation of the Merging Series as provided in the Agreements and Plans of Reorganization; and o the renaming of the Surviving Series as Phoenix-MFS Investors Growth Stock Series. The reorganization is anticipated to occur on or about February 14, 2003. If each reorganization agreement is implemented, the Phoenix separate accounts holding shares of each Merging Series will receive a number of full and fractional shares of the Surviving Series shares with an aggregate net asset value equal to the aggregate net asset value as of the closing date of the reorganization. The implementation of each reorganization agreement is subject to a number of conditions set forth therein. See "The Proposed Reorganizations." Among the significant conditions (which may not be waived) are: o the receipt by the Trust of an opinion of counsel that, for federal income tax purposes, the reorganization will qualify, as a tax free reorganization described in Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); o the approval of the reorganization agreement by Phoenix separate accounts representing interests in both Merging Series; and o the approval of each reorganization agreement by the requisite percentage of Trustees of their meeting on February 10, 2003. Each reorganization agreement provides that PLIC will bear all costs and expenses of the reorganization, including the costs of the meeting, the costs and expenses incurred in the preparation and mailing of the notice, this Prospectus/Proxy Statement and the proxy, and the solicitation of voting instructions. INVESTMENT OBJECTIVES AND POLICIES The investment objectives and principal investment strategies of each Merging Series and the Surviving Series are similar: o The Phoenix-Van Kampen Focus Equity Series has an investment objective of capital appreciation by investing primarily in equity securities. The Phoenix-MFS Investors Growth Stock Series has an investment objective of long-term growth of capital and future income rather than current income. The Surviving Series has an investment objective of long-term growth of capital in a manner consistent with the preservation of capital. o Under normal circumstances, the Phoenix-Van Kampen Focus Equity Series invests at least 80% of its assets in a non-diversified portfolio of equity securities. These securities may include common and preferred stocks, depositary receipts, convertible securities, rights, warrants, and equity related options and futures. o Under normal circumstances, the Phoenix-MFS Investors Growth Stock Series invests at least 80% of its assets in a portfolio of equity securities. These securities may include common and preferred stocks. o Under normal circumstances, the Surviving Series invests primarily in equity securities selected for their growth potential. The Series invests primarily in U.S. and foreign equity securities, which may include preferred stocks, common stocks, warrants and securities convertible into common and preferred stocks. See "Principal Risk Factors" and "Comparison of Investment Objectives and Policies" below, for further information on the similarities and differences between the investment objectives, policies and risks of the Surviving Series and each Merging Series. You can also find additional information for the Surviving Series in the Trust's Prospectus. 5 DIVIDENDS AND DISTRIBUTIONS Phoenix-Van Kampen Focus Equity Series and Phoenix-Janus Growth Series distributes net income quarterly and Phoenix-MFS Investors Growth Stock Series distributes net investment income semi-annually. Each Series distributes net realized capital gains, if any, at least annually. All dividends and distributions of each Merging Series is paid in additional shares of the respective Series. You can also find additional information on dividends and distributions for the Surviving Series in its Prospectus. EXCHANGES The shares of the Trust are not directly offered to the public. Shares of the Trust are currently offered through certain separate accounts to fund variable annuity contracts and variable life insurance policies. The policyholder can invest in the Trust only by buying a contract and directing the allocation of the payment(s) to the subaccount(s) corresponding to the Series in which the policyholder wishes to invest. The subaccount, in turn, invest in shares of the Trust. Not all Series may be available through a particular contract. At this time Phoenix does not charge for subaccount transfers, however Phoenix does reserve the right to charge a fee of up to $20 per transfer after first twelve transfers in each contract year. Because excessive trading can hurt fund performance and therefore be detrimental to all contract owners, Phoenix does reserve the right to temporarily or permanently terminate exchange privileges or reject any specific order from anyone whose transactions seem to follow a timing pattern, including those who request more than one exchange out of a subaccount within any 30-day period. Phoenix will not accept batch transfer instructions from registered representatives (acting under powers of attorney for multiple contract owners), unless we have entered into a third-party transfer service agreement with the registered representative's broker-dealer firm. REDEMPTION PROCEDURES As an owner of a variable annuity or variable life insurance contract issued by PLIC, or its affiliated insurance companies, the owner has the contractual right to instruct the insurance company how to vote and redeem the shares of the Merging Series and the Surviving Series. Shareholders of each Series may redeem their shares at a redemption price equal to the net asset value of the shares (minus any applicable product surrender charge) as next determined following the receipt of a redemption order in proper form. Ordinarily, payments of redemption proceeds for redeemed shares are made within seven days after receipt of a redemption request in proper form. See "Comparative Information on Shareholder Services" for more information. You can also find additional information on the Surviving Series' redemption procedures in its Prospectus. FEDERAL TAX CONSEQUENCES OF PROPOSED REORGANIZATIONS At the closing of the reorganizations contemplated herein, the Trust will receive an opinion of counsel, subject to customary assumptions and representations, that, for federal income tax purposes, the reorganizations will qualify as a tax free reorganization described in Section 368(a) of the Code. Accordingly: o no gain or loss will be recognized by the Phoenix-Van Kampen Focus Equity Series or the Phoenix-MFS Investors Growth Stock Series on the transfer of the assets of the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series, respectively, to the Surviving Series solely in exchange for Surviving Series shares and the assumption by the Surviving Series of all known liabilities of the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series or upon the distribution of Surviving Series shares to the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series shareholders in exchange for their shares of the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series, respectively; and o no gain or loss will be recognized by the Surviving Series upon the receipt of the assets of the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series solely in exchange for the 6 Surviving Series shares and the assumption by the Surviving Series of all known liabilities of the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series. We also believe that both reorganizations should not adversely impact the tax treatment of your variable life or variable annuity contracts. See "The Proposed Reorganizations--Federal Income Tax Consequences" for more information. RISK FACTORS An investment in the Surviving Series is subject to specific risks arising from the types of securities in which the Surviving Series invests and general risks arising from investing in any mutual fund type of investment. The primary risks to which the Surviving Series is subject include equity securities investment risk, growth stock investment risk, foreign investment risk (including emerging market investment risk and foreign currency risk), smaller market capitalization risk, fixed income securities investment risk (including interest rate risk and credit risk) and junk bond investment risk. Investors can lose money by investing in the Surviving Series. There is no assurance that the Surviving Series will meet its investment objective. Because the Surviving Series' investment objectives and policies are similar to those of each Merging Series, an investment in the Surviving Series is subject to many of the same risks as an investment in each of the Merging Series. See "Principal Risk Factors" for the principal risks associated with an investment in the Surviving Series. MANAGEMENT PVA is the investment adviser of each Series. MSIM is the subadviser for the Phoenix-Van Kampen Focus Equity Series and as such is responsible for its day-to-day portfolio management. MFS is the subadviser for the Phoenix-MFS Investors Growth Stock Series and as such is responsible for its day-to-day portfolio management. Janus, at this time, is the subadviser for the Surviving Series. Immediately prior to completion of the proposed merger, Janus will be removed as subadviser of the Surviving Series and be replaced by MFS. The Surviving Series will then be renamed Phoenix-MFS Investors Growth Stock Series. MFS is also the subadviser of Phoenix-MFS Investors Trust Series and the Phoenix-MFS Value Series, other series of the Trust. MFS intends to manage the Surviving Series using the same principal investment strategies that it currently deploys in connection with the Phoenix-MFS Investors Growth Stock Series. The Phoenix-Van Kampen Focus Equity Series is managed by Van Kampen's Large Cap Growth Team. Current members of the team include William S. Auslander, Managing Director, and Jeffrey Alvino, Executive Director. Mr. Auslander is an Executive Director of MSIM and joined MSIM in 1995 as an equity analyst. Mr. Auslander graduated from the University of Wisconsin at Madison with a B.A. in Economics and received an M.B.A. from Columbia University. Jeffrey Alvino is an Executive Director of MSIM and joined MSIM in 1995. Mr. Alvino graduated from Lehigh University with a B.S. in Accounting. He has earned the right to use the Chartered Financial Analyst designation and is a Certified Public Accountant. Stephen Pesek is the portfolio manager of the Phoenix-MFS Investors Growth Stock Series. When MFS replaces Janus as subadviser of the Surviving Series, Mr. Pesek will be the portfolio manager for the Surviving Series. Mr. Pesek, a Senior Vice President of MFS, has been employed in the investment management area of MFS since 1994. E. Marc Pinto is currently portfolio manager of the Surviving Series. He is also the portfolio manager of several portfolios in the large cap growth discipline. He has also served as an assistant portfolio manager of Janus Twenty Fund and Janus Growth and Income Fund. Mr. Pinto has a bachelor's degree in history from Yale University and an M.B.A. from Harvard University, where he graduated with distinction. Mr. Pinto has 16 years of professional investment experience and has earned the right to use the Chartered Financial Analyst designation. 7 COMPARATIVE FEE TABLES The tables below are designed to assist you in understanding the various direct and indirect costs and expenses associated with an investment in each Series. The table and the example do not include any fees or sales charges imposed under the variable products for which the Series is an investment option. This table describes the fees and expenses that you may pay if you buy and hold shares of the Series. The tables and the example do not include any fees or sales charges imposed under the variable products for which the Series is an investment option. If they were included, your costs would be higher. Investors should consult the contract prospectus for more information. Each table also includes pro forma information for the combined Surviving Series resulting from the reorganization assuming the reorganization takes place on February 14, 2003, and after adjusting such information to reflect current fees. The expense information for the Surviving Series and each Merging Series is based upon expenses for the period ending September 30, 2002. The following table shows shareholder transaction expenses currently applicable to the purchase of shares of each Series. Please note that while advisory fees for the Surviving Series are currently 0.85% of the Series' average net assets (total Series expenses are 1.10% of average net assets after reimbursement by the Adviser), upon completion of the proposed merger advisory fees for the Surviving Series will be reduced to 0.75% of the Series' average net assets (total Series expenses will be 1.00% of average net assets after reimbursement by the Adviser) to reflect the current relationship between the Adviser and MFS. MERGING SERIES AND SURVIVING SERIES - ---------------------------------------------------------- SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) N/A Maximum Deferred Sales Charge (Load) (as a percentage of the lesser of the value redeemed or the amount invested) N/A Maximum Sales Charge (Load) Imposed on Reinvested Dividends [and other Distributions] N/A Redemption Fee N/A Exchange Fee N/A Maximum Account Fee N/A EXAMPLE As indicated in the tables below, immediately upon effectiveness of the reorganization, the "Total Annual Fund Operating Expenses" for the combined Surviving Series are expected to be slightly lower than the "Total Annual Fund Operating Expenses" for each of the Merging Series.
PHOENIX-VAN PHOENIX-MFS KAMPEN FOCUS INVESTORS GROWTH PRO FORMA SURVIVING SERIES EQUITY SERIES STOCK SERIES COMBINED SERIES ---------------- ------------- ------------ --------------- Annual Fund Operating Expenses (expenses that are deducted from series assets) Management Fees 0.85% 0.85% 0.75% 0.75%(1) Distribution and service (12b-1 Fees) None None None None Other Expenses 0.27%(2) 2.02%(2) 3.96%(3) 0.38%(4) - ---------- (1) Fees reflect anticipated reduction in advisory fees. (2) As of May 1, 2002, the series' investment advisor voluntarily agreed to reimburse the series' expenses, other than the management fees, to the extent that such expenses exceed 0.25% of the series' average net assets. Therefore,
8
Total Annual Fund Operating Expenses 1.12% 2.87% 4.71% 1.13%
The following example illustrates the impact of the above fees and expenses on an account with an initial investment of $10,000, based on the expenses shown above. It assumes a 5% annual return, the reinvestment of all dividends and distributions and "Annual Fund Operating Expenses" remaining the same each year. This example is hypothetical; actual fund expenses and returns vary from year to year, and may be higher or lower than those shown. Fees and expenses if you redeemed your shares at the end of each time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS Surviving Series $114 $356 $617 $1,363 Phoenix-Van Kampen Focus Equity Merging Series $290 $889 $1,513 $3,195 Phoenix-MFS Investors Growth Stock Merging Series $472 $1,419 $2,372 $4,779 Pro Forma Combined Surviving Series $115 $359 $622 $1,375
Note: Actual expenses for the series may be lower than those shown in the example above since the expense levels used to calculate the figures shown do not include the effect of expense reimbursements by the series' adviser. The purpose of the tables above is to help the investor understand the various costs and expenses that the investor will bear directly or indirectly. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN SHOWN. PRINCIPAL RISK FACTORS GENERAL Because the Surviving Series' investment objective and policies are similar to those of each Merging Series, an investment in the Surviving Series is subject to many of the same specific risks as an investment in each Merging Series. The following highlights the principal similarities and differences between the principal risk factors associated with an investment in the Surviving Series as contrasted with those associated with each Merging Series and is qualified in its entirety by the more extensive discussion of risk factors in the Prospectuses and Statements of Additional Information of the Surviving Series and the Merging Series, respectively. - -------------------------------------------------------------------------------- the series' operating expenses after reimbursement would have been 1.10% for the 12-month period ended September 30, 2002, had the new expense cap level been in place for the entire period. The actual operating expense after reimbursement was 1.06% for the 12-month period ended September 30, 2002. The expense cap may be changed or eliminated at any time without notice. (3) As of May 1, 2002, the series' investment advisor voluntarily agreed to reimburse the series' expenses, other than the management fees, to the extent that such expenses exceed 0.25% of the series' average net assets. Therefore, the series' operating expenses after reimbursement would have been 1.00% for the 12-month period ended September 30, 2002, had the new expense cap level been in place for the entire period. The actual operating expense after reimbursement was 0.97% for the 12-month period ended September 30, 2002. The expense cap may be changed or eliminated at any time without notice. (4) The series' investment advisor agrees to reimburse the series' expenses, other than the management fees, to the extent that such expenses exceed 0.25% of the series' average net assets. Therefore, the series' operating expenses after reimbursement would have been 1.00% for the 12-month period ended September 30, 2002, had this expense cap level been in place for the entire period. The expense cap may be changed or eliminated at any time without notice. 9 The value of the investments of the Merging Series and the Surviving Series that supports your share value can decrease as well as increase. If between the time you purchase shares and the time you sell shares the value of your series' investments decreases, you will lose money. In the same manner as with the Merging Series, an investment in the Surviving Series is subject to specific risks arising from the types of securities in which the Surviving Series invests and general risks arising from investing in any mutual fund. You can lose money by investing in the Surviving Series. There is no assurance that the Surviving Series will meet its investment objective. Investment values can decrease for a number of reasons. Conditions affecting the overall economy, specific industries or companies in which your fund invests can be worse than expected and investments may fail to perform as the Series' investment subadviser expects. As a result, the value of your shares may decrease. Each Series' investments are subject generally to market risk and the risk of selecting underperforming securities and asset classes which may adversely affect the series and lead to loss of principal. PRINCIPAL RISK FACTORS OF INVESTING IN EACH SERIES The following chart indicates the primary investment risks of the Surviving Series and of the Merging Series. These are the risks currently in effect for the Phoenix-Janus Growth Series. Upon completion of the Plans of Reorganization and the anticipated replacement of the subadvisor to the Surviving Series, the principal risks for the Surviving Series would be expected to be the same as those applicable to the Phoenix-MFS Investors Growth Stock Series. Descriptions of the risks that can adversely affect the Series' net asset value, yield, and total return, can be found below.
Phoenix-MFS Investors Growth Phoenix-Van Kampen Focus Surviving Series ---------------------------- ------------------------ ---------------- Stock Series Equity Series ------------ ------------- Equity Securities Investment Risk Equity Securities Investment Risk Equity Securities Investment Risk Growth Stock Investment Risk Growth Stock Investment Risk Growth Stock Investment Risk Foreign Investment Risk Foreign Investment Risk Foreign Investment Risk Foreign Currency Risk Non-Diversification Risk Foreign Currency Risk Portfolio Turnover Risk Derivative Investment Risk Emerging Market Investment Risk Convertible Securities Investment Risk Fixed Income Securities Investment Risk Smaller Market Capitalization Risk Interest Rate Risk Credit Risk Junk Bond Investment Risk
Upon completion of the Plans of Reorganization, the Phoenix-MFS Investors Growth Stock Series and Phoenix-Van Kampen Focus Equity Series will merge into Phoenix-Janus Growth Series. Phoenix-Janus Growth Series will change its name to Phoenix-MFS Investors Growth Stock Series. MFS Investment Management will replace Janus Capital Management LLC as sub-adviser and will manage the risks of the Surviving Series. MFS will manage the Surviving Series as the Phoenix-MFS Investors Growth Stock Series is currently managed. The risks of the Surviving Series will then be as follows: Equity Securities Investment Risk; Growth Stock Investment Risk; Foreign Investment Risk; Foreign Currency Risk; Portfolio Turnover Risk and Convertible Securities Investment Risk. EQUITY SECURITIES INVESTMENT RISK In general, prices of equity securities are more volatile than those of fixed-income securities. The prices of equity securities will rise and fall in response to a number of different factors. In particular, equity securities will respond to events that affect entire financial markets or industries (changes in inflation or consumer demand, for example) and to events that affect particular issuers (news about the success or failure of a new product, for example). 10 GROWTH STOCK INVESTMENT RISK Because growth stocks typically make little or no dividend payments to shareholders, investment return is based on a stock's capital appreciation, making return more dependent on market increases and decreases. Growth stocks are therefore more volatile than non-growth stocks to market changes, tending to rise faster when markets rise and drop more sharply when markets fall. FOREIGN INVESTMENT RISK Foreign investments could be more difficult to sell than U.S. investments. They also may subject a Series to risks different from investing in domestic securities. Investments in foreign securities involve difficulties in receiving or interpreting financial and economic information, possible imposition of taxes, higher brokerage and custodian fees, possible currency exchange controls or other government restrictions, including possible seizure or nationalization of foreign deposits or assets. Foreign securities may also be less liquid and more volatile than U.S. securities. There may also be difficulty in invoking legal protections across borders. In addition, investment in emerging-market countries presents risks in greater degree than those presented by investment in foreign issuers in countries with developed securities markets and more advanced regulatory systems. Some foreign securities are issued by companies organized outside the United States and are traded only or primarily in trading markets outside the United States. These foreign securities can be subject to most, if not all, of the risks of foreign investing. Some foreign securities are issued by companies organized outside the United States but are traded in U.S. securities markets and are denominated in U.S. dollars. For example, American Depositary Receipts and shares of some large foreign-based companies are traded on principal U.S. exchanges. Other securities are not traded in the United States but are denominated in U.S. dollars. These securities are not subject to all the risks of foreign investing. For example, foreign trading market or currency risks will not apply to dollar-denominated securities traded in U.S. securities markets. DERIVATIVE INVESTMENT RISK The Series may use various instruments that drive their values from those of specific securities, indexes, currencies, or other points of reference for both hedging and non-hedging purposes. Derivatives include, but are not limited to, futures, options, forward contracts, swaps, and structured notes. These derivatives, including those used to manage risks, are themselves subject to risks of the different markets in which they trade and, therefore, may not serve their intended purpose. These investments may not protect the Series from losses, they may decrease overall return, and they could, in unusual circumstances, expose the Series to losses that could be unlimited. A Series' performance may be worse than if it did not make such investments. If the prices for derivatives and prices in the cash market do not correlate as expected or if expectations about interest rate, exchange rate or general market movements are incorrect, a Series' returns may not be as high as they would be if it did not invest in these securities. There is also a risk that the market for reselling derivatives may be limited or nonexistent. A Series could incur unlimited losses if it cannot liquidate its derivatives investments. Decisions about the nature and timing of derivative transactions may result in losses when other investors' decisions about the same derivatives result in gains. In addition, some derivatives are subject to the risk that the counterparty to such transaction may not perform as expected. PORTFOLIO TURNOVER RISK A Series may, consistent with its investment policies, purchase and sell securities without regard to the effect on portfolio turnover. High portfolio turnover (e.g. over 100%) involves correspondingly greater expenses to the Series, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely affect the Series' performance. High portfolio turnover may also result in taxable gains to shareholders. FOREIGN CURRENCY RISK Changes in foreign exchange rates will affect the value of those securities denominated or quoted in currencies other than the U.S. dollar. The forces of supply and demand in the foreign exchange markets determine exchange rates and these forces are in turn affected by a range of economic, political, financial, governmental and other factors. Exchange rate fluctuations can affect a Series' net asset value (share price) and dividends either positively or 11 negatively depending upon whether foreign currencies are appreciating or depreciating in value relative to the U.S. dollar. Exchange rates fluctuate over both the short and long terms. In addition, when certain foreign countries experience economic difficulties, there is an increased risk that the foreign government may impose restrictions on the free exchange of its currency. SMALLER MARKET CAPITALIZATION RISK The Series invests in companies with small and medium capitalizations, which make the Series more volatile than funds that invest in companies with larger capitalizations. The smaller companies may be affected to a greater extent than larger companies by changes in general economic conditions and conditions in particular industries. Smaller companies also may be relatively new and not have the same operating history and "track record" as larger companies. This could make future performance of smaller companies more difficult to predict. Companies with small capitalization are often companies in industries that have recently emerged due to cultural, economic, regulatory or technological developments. Such developments can have a significant positive or negative effect on small capitalization companies and their stock performance. Given the limited operating history and rapidly changing fundamental prospects, investment returns from smaller capitalization companies can be highly volatile. Smaller companies may find their ability to raise capital impaired by their size or lack of operating history. Product lines are often less diversified and subject to competitive threats. Smaller capitalization stocks are subject to varying patterns of trading volume and may, at times, be difficult to sell. FIXED INCOME SECURITIES INVESTMENT RISK The Series may invest in fixed-income securities. The risks associated with investments in fixed-income securities include interest rate risk and credit risk. INTEREST RATE RISK. The value of fixed-income securities will be directly affected by trends in interest rates. For example, in times of rising interest rates, the value of these type of securities tends to decrease. When interest rates fall, the value of these securities tends to rise. Interest rate changes have a greater effect on the price of fixed-income securities with longer durations. CREDIT RISK. If the issuer of a portfolio security is unable or unwilling to make timely interest or other income payments to the Series, the Series' income available for distribution to shareholders and the Series' yield may decrease. Credit risk for debt obligations generally increases as the credit rating declines. Thus, when the credit rating declines, there is an increased chance the issuer may not be able to make principal and interest payments on time. JUNK BOND INVESTMENT RISK High-yield, high-risk securities (so called "junk-bonds") are securities rated below investment grade by the primary rating agencies such as Standard & Poor's and Moody's. Below-investment grade securities present a greater risk that the issuer will not be able to make interest or principal payments on time. If this happens, the Series would lose income and could expect a decline in the market value of the securities. Issuers of high-yield securities may not be as strong financially as those issuing bonds with higher credit ratings, and are more vulnerable to real or perceived economic changes, political changes, or adverse developments specific to the issuer. Analysis of the creditworthiness of issuers of below investment grade securities may be more complex than for higher grade securities, making it more difficult to accurately predict risk. The junk-bond market can experience sudden and sharp price swings. CONVERTIBLE SECURITIES INVESTMENT RISK A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount of common stock of the same or a different user within a particular period of time at a specific price or formula. A convertible security entitles the holder to receive interest generally paid or accrued on debt or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Convertible securities have several unique investment characteristics such as (1) higher yields than common stocks, but lower yields than comparable nonconvertible securities, (2) a lesser degree of fluctuation in value then the underlying stock since they have fixed income characteristics and (3) the potential for capital appreciation if the market price of the underlying common stock increases. Up to 5% of each Series' assets may be invested in convertible securities that are rated below investment grade (commonly referred to as "junk" securities). Such securities present greater credit and market risks than investment grade securities. (This 5% restriction does not apply to the Phoenix-Janus Flexible Income or Phoenix-Janus Growth Series.) A convertible security might be subject to redemption at the option of the issuer at a price established in the convertible security's governing instrument. If a convertible security held by a Series is called for redemption, the Series may be required to permit the issuer to redeem the security, convert it into the underlying common stock or sell it to a third party. 12 EMERGING MARKET SECURITIES "Emerging Markets" are those countries or regions with relatively low gross national product per capita compared to the world's major economies, and those countries or regions with the potential for rapid economic growth (emerging markets). Emerging markets in Asia will include countries: (i) having an "emerging stock market" as defined by the International Finance Corporation; (ii) with low-to middle-income economies according to the International Bank for Reconstruction and Development (the "World Bank"); (iii) listed in World Bank publications as developing; or (iv) determined by the advisor to be an emerging market as defined above. The Series may invest in securities of: (i) companies where the principal securities trading market is an emerging market country; (ii) companies organized under the laws of, and with a principal office in, an emerging market country; or (iii) companies whose principal activities are located in emerging market countries. The risks of investing in foreign securities may be intensified in the case of investments in emerging markets. Securities of many issuers in emerging markets may be less liquid and more volatile than securities of comparable domestic issuers. Emerging markets also have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Delays in settlement could result in temporary periods when a portion of the assets of the Series is uninvested and no return is earned thereon. The inability of the Series to make intended security purchases due to settlement problems could cause the Series to miss attractive investment opportunities. Inability to dispose of portfolio securities due to settlement problems could result either in losses to the Series due to subsequent declines in value of the portfolio securities or, if the Series has entered into a contract to sell the security, in possible liability to the purchaser. Securities prices in emerging markets can be significantly more volatile than in the more developed nations of the world, reflecting the greater uncertainties of investing in less established markets and economies. In particular, countries with emerging markets may have relatively unstable governments, present the risk of nationalization of businesses, restrictions on foreign ownership or prohibitions of repatriation of assets, and may have less protection of property rights than more developed countries. The economies of countries with emerging markets may be predominately based on only a few industries, may be highly vulnerable to changes in local or global trade conditions, and may suffer from extreme and volatile debt burdens or inflation rates. Local securities markets may trade a small number of securities and may be unable to respond effectively to increases in trading volume, potentially making prompt liquidation of substantial holdings difficult or impossible at times. Securities of issuers located in countries with emerging markets may have limited marketability and may be subject to more abrupt or erratic price movements. Certain emerging markets may require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, if deterioration occurs in an emerging market's balance of payments or for other reasons, a country could impose temporary restrictions on foreign capital remittances. The Series could be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation of capital, as well as by the application to the Series of any restrictions on investments. Investments in certain foreign emerging market debt obligations may be restricted or controlled to varying degrees. These restrictions or controls may at times preclude investment in certain foreign emerging market debt obligations and increase the expenses of the Series. THE PROPOSED REORGANIZATIONS AGREEMENTS AND PLANS OF REORGANIZATION The terms and conditions under which the proposed reorganizations may be consummated are set forth in the respective reorganization agreements. Significant provisions of the reorganization agreements are summarized below. This summary, however, is qualified in its entirety by reference to the reorganization agreements, forms of which are attached to this Prospectus/Proxy Statement as Appendices A and B. With respect to the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series Reorganizations, the Agreements and Plans of Reorganization contemplate: 13 o the acquisition by the Surviving Series, on the closing date of the reorganization, of all of the assets of the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series, respectively, in exchange solely for shares of the Surviving Series and the assumption by the Surviving Series of all known liabilities of the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series; o the pro rata distribution of the Surviving Series shares to the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series shareholders in exchange for the outstanding Phoenix-Van Kampen Focus Equity Series shares and the Phoenix-MFS Investors Growth Stock Series; o the complete liquidation of the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series as provided in the Agreements and Plans of Reorganization; and o the renaming of the Surviving Series as Phoenix-MFS Investors Growth Stock Series. The assets of the Merging Series are to be acquired by the Surviving Series include all property, including, without limitation, all cash, securities, and dividends or interest receivables which are owned by the Merging Series and any deferred or prepaid expenses shown as an asset on the books of the Merging Series on the closing date of the reorganization. The Surviving Series will assume all liabilities, accrued expenses, costs, charges, and reserves of the Merging Series reflected on an unaudited statement of assets and liabilities as of the closing date. The closing of the reorganization will occur following satisfaction (or waiver) of the conditions to closing set forth in the reorganization agreement, or such later date as the parties may agree. The value of the Merging Series' assets to be acquired and the Merging Series' liabilities to be assumed by the Surviving Series and the net asset value of shares of the Surviving Series will be determined immediately after the close of regular trading on the New York Stock Exchange on the closing date, using the valuation procedures set forth in the Series' then current Prospectus and Statement of Additional Information as supplemented. The number of shares of the Surviving Series to be issued to each Merging Series will be determined by dividing (a) the value of the aggregate net assets attributable to shares of the Merging Series, respectively by (b) the net asset value per share of the Surviving Series. On the closing date, the Merging Series will liquidate and distribute pro rata to their shareholders of record the Surviving Series shares received by the Merging Series in exchange for their respective shares in the Merging Series. This liquidation and distribution will be accomplished by opening an account on the books of the Surviving Series in the name of each shareholder of record of the Merging Series and by crediting to each account the shares due pursuant to the reorganization. Every Merging Series shareholder will own shares of the Surviving Series immediately after the reorganizations, the value of which will be equal to the value of the shareholder's Merging Series shares immediately prior to the reorganizations. At or prior to the closing date, the Merging Series will declare a dividend or dividends which, together with all previous such dividends, will have the effect of distributing to the Merging Series shareholders all of the Merging Series' investment company taxable income for all taxable years ending at or prior to the closing date and all of its net capital gains realized (after reduction for any capital loss carry-forward) in all taxable years ending at or prior to the closing date. Subject to certain limitations on liability, the Surviving Series has agreed to indemnify and hold harmless those Trustees of the Trust who are not "interested persons" of the adviser or distributor of the Merging Series (the "Independent Trustees") from and against any and all claims, costs, expenses (including reasonable attorneys' fees), losses and liabilities of any sort or kind (collectively "Liability") which may be asserted against them or for which the Independent Trustees may become liable arising out of or attributable to the transactions contemplated by the reorganization agreements, provided that any Independent Trustee seeking the benefit of this indemnification shall not have materially contributed to the creation of such liability by acting in a manner contrary to his or her fiduciary duties as a trustee under the 1940 Act. 14 The consummation of each reorganization is subject to a number of conditions set forth in the reorganization agreement. Certain of these conditions may be waived by the Board of Trustees, or by an authorized officer of the Trust, as appropriate. Among the significant conditions which may not be waived are: (a) the receipt by the Trust of an opinion of counsel that, the reorganization will qualify as a tax free reorganization described in Section 368(a) of the Code for federal income tax purposes, and (b) the approval of the reorganization agreement by the shareholders of the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series. The Plan may be terminated and the reorganization abandoned at any time, before or after approval by the shareholders of the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series, prior to the closing date, by resolution of the Board of Trustees. In addition, the reorganization agreement may be amended by mutual agreement, except that no amendment may be made to the reorganization agreement subsequent to the meeting that would change the provisions for determining the number of Surviving Series shares to be issued to shareholders of the Phoenix-Van Kampen Focus Equity Series and the Phoenix-MFS Investors Growth Stock Series without their further approval. REASONS FOR THE REORGANIZATIONS The proposed reorganizations are the outcome of the deliberation by the Executive Committee and the Trustees of the Trust. Management initially recommended that the Trustees consider the following Series mergers: Merged Series Surviving Series - ------------- ---------------- Phoenix-Van Kampen Focus Phoenix-MFS Investors Growth Equity Series Stock Series Phoenix-Janus Growth Series Management recommended that the Trustees consider the benefits that the Series' shareholders would realize if each of the Merging Series were to be combined with the Surviving Series. In response to its recommendation, the independent Trustees of the Trust requested that Management outline specific reorganization proposals for their consideration and provide an analysis of the specific benefits that shareholders would realize from each proposal. Independent trustees are Trustees who are not "interested persons" of the Trust (as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the "1940 Act")). After considering the specific reorganization proposals, the Trustees, including the independent trustees, at a meeting held on November 12, 2002, unanimously approved the reorganizations. In the course of their review, the Trustees noted that the reorganizations would be a means of combining three Series with similar investment objectives and principal investment strategies and would permit the shareholders of the Merging Series to pursue their investment goals in a Surviving Series, which after the completion of the reorganization, is anticipated to be larger than each merging series. In reaching this conclusion, the Board considered a number of additional factors, including, but not limited to, the following: o the potential benefits of the reorganizations to shareholders of the Surviving Series and the Merging Series, including that the reorganizations could result in economies of scale through the spreading of fixed costs over a larger asset base; o that the terms and conditions of the proposed Plans are not likely to result in dilution of any shareholder interests; o the compatibility of investment objectives, policies, restrictions and investment holdings of the Merging Series and the Surviving Series; o lower or equivalent management fees and operating expenses for the Surviving Series as compared to the Merging Series; 15 o the declining asset base of the Phoenix-Van Kampen Focus Equity Series; o uncertainty with respect to the management and ownership of Janus; o the superior historical performance of mutual funds managed by MFS that share similar investment objectives and strategies with the Merging Series and the Surviving Series; o that the terms and conditions of the Plans are unlikely to affect the price of the outstanding shares of each Series; o that the reorganizations provide for continuity of distribution and shareholder servicing arrangements; and o that the reorganizations will not result in the recognition of any gain or loss for federal income tax purposes either to the Merging Series or the Surviving Series and should not adversely impact the tax treatment of variable products invested in whole or in part in any of the Series. After considering these and other factors, the Trustees, including the Independent Trustees, unanimously concluded at a meeting held on November 12, 2002 that the reorganizations are fair and reasonable and would be in the best interests of each Merging Series and the Surviving Series and their respective shareholders and that the interests of the Series' shareholders will not be diluted as a result of the transactions contemplated by the reorganizations. The Trustees then unanimously voted to approve the reorganizations and authorized the officers of the Trust to submit the reorganization proposals to shareholders for consideration. Upon further analysis and consideration, after the November 12, 2002 Board of Trustees meeting, it was determined that the approved mergers should not be completed as previously proposed. Because the Phoenix-MFS Investors Growth Stock Series had minimal assets under management and was relatively new in comparison to the Phoenix-Janus Growth Series, it was the opinion of the Trust's counsel and independent accountants that the Phoenix-Janus Growth Series was a better selection for the Surviving Series. Consequently, Management sought the consideration and approval of the Executive Committee of the Board of Trustees of the Trust on December 10, 2002 for the following revised proposal: Merged Series Surviving Series - ------------- ---------------- Phoenix-Van Kampen Focus Phoenix-Janus Growth Series Equity Series Phoenix-MFS Investors Growth Stock Series The Executive Committee considered the following factors in deciding to approve the revised proposal: o the potential benefits of the reorganizations to shareholders of the Surviving Series and the Merging Series, including that the reorganizations could result in economies of scale through the spreading of fixed costs over a larger asset base; o that the terms and conditions of the proposed Plans are not likely to result in dilution of any shareholder interests; o the compatibility of investment objectives, policies, restrictions and investment holdings of the three series to be merged; o the declining asset base of the Phoenix-Van Kampen Focus Equity Series; o uncertainty with respect to the management and ownership of Janus; 16 o the superior historical performance of mutual funds managed by MFS that share similar investment objectives and strategies with the Merging Series and the Surviving Series; o that the terms and conditions of the Plans are unlikely to affect the price of the outstanding shares of each Series; o that the reorganizations provide for continuity of distribution and shareholder servicing arrangements; and o that the reorganizations will not result in the recognition of any gain or loss for federal income tax purposes either to the Merging Series or the Surviving Series and should not adversely impact the tax treatment of variable products invested in whole or in part in any of the Series. The Executive Committee approved this revised proposal, recognizing that while less direct than Management's initial proposal, this method of reorganization is attractive for many of the same reasons as the original proposal and allows for the largest of the three affected series (the Phoenix-Janus Growth Series) to serve as the accounting, legal and performance survivor. By making the Phoenix-Janus Growth Series the accounting, legal and performance survivor, current and future investors, as well as regulators would be more able to review the accounting and performance history and legal makeup of the Surviving Series. Management will seek ratification from the Trustees as a whole at the regularly scheduled February 10, 2003 Board of Trustees meeting, before completing this reorganization. FEDERAL INCOME TAX CONSEQUENCES McDermott, Will & Emery is to opine that, subject to customary assumptions and representations, on the basis of the existing provisions of the Internal Revenue Code (the "Code"), the Treasury Regulations promulgated thereunder and current administrative and judicial interpretations thereof, for federal income tax purposes, the reorganization will qualify as a tax free reorganization described in Section 368(a) of the Code. Accordingly, with respect to each reorganization: o no gain or loss will be recognized by the Merging Series on the transfer of its assets to the Surviving Series solely in exchange for Surviving Series shares and the assumption by the Surviving Series of all known liabilities of the Merging Series or upon the distribution of Surviving Series shares to the Merging Series insurance company shareholders in exchange for their shares of the Merging Series; o the tax basis of the Merging Series' assets acquired by the Surviving Series will be the same to the Surviving Series as the tax basis of such assets to the Merging Series immediately prior to the reorganization, and the holding period of the assets of the Merging Series in the hands of the Surviving Series will include the period during which those assets were held by the Merging Series; and o no gain or loss will be recognized by the Surviving Series upon the receipt of the assets of the Merging Series solely in exchange for the Surviving Series shares and the assumption by the Surviving Series of all known liabilities of the Merging Series. The receipt of such opinions that the reorganization will qualify as a tax free reorganization described in Section 368(a) of the Code, are conditions to the consummation of the reorganizations. The Trust has not obtained an Internal Revenue Service ("IRS") private letter ruling regarding the federal income tax consequences of the reorganizations, and the IRS is not bound by advice of counsel. You are not directly a shareholder of either Merging Series but, instead, some or all of your variable life insurance or variable annuity contract is invested in one or both of the Merging Series pursuant to your policy or contract. We also believe, however, that the reorganizations should not adversely affect the tax treatment of your variable contract. It is possible, although unlikely in our view, that, because the Merging Series will no longer be an available Series underlying your variable contract, your contract could be considered changed in a manner that causes the contract or policy to be considered newly issued for tax purposes. In such a case, your contract will be subject to tax rules in effect on the effective date of the reorganizations instead of the tax rules in 17 effect on the issue date of your contract, which could have been more favorable. Shareholders of the Series should consult their tax advisers regarding the effect, if any, for the proposed reorganizations in light of their individual circumstances. Since the foregoing discussion relates only to the federal income tax consequences of the reorganizations, shareholders of the Series should also consult tax advisers as to state and local tax consequences, if any, of the reorganizations. It is also possible that if the reorganization were not tax free, which as indicated above is not expected, and the Surviving Series as a result failed to qualify as a regulated investment company, the diversification rules of Code Section 817(h) might be violated. In such a case, income on your variable annuity or variable life contract could be currently taxable on you. CAPITALIZATION The following table sets forth the capitalization of the Surviving Series and each Merging Series, and on a pro forma basis for the combined Surviving Series as of September 30, 2002 giving effect to the proposed acquisition of net assets of each Merging Series at net asset value.
- ------------------------------------- ---------------- ----- ------------------ ------------------- ------------------ SURVIVING PHOENIX-VAN PHOENIX-MFS PRO FORMA SERIES KAMPEN FOCUS INVESTORS COMBINED EQUITY SERIES GROWTH STOCK SERIES SERIES - ------------------------------------- ---------------- ----- ------------------ ------------------- ------------------ Net assets $ 54,970,173 $ 6,353,166 $ 4,556,264 $ 65,879,554 - ------------------------------------- ---------------- ----- ------------------ ------------------- ------------------ Net asset value per share $ 4.77 $ 5.20 $ 7.50 $ 4.77 - ------------------------------------- ---------------- ----- ------------------ ------------------- ------------------ Shares outstanding 11,531,386 1,220,839 607,420 13,819,904 - ------------------------------------- ---------------- ----- ------------------ ------------------- ------------------
The table set forth above should not be relied on to determine the number of Surviving Series shares to be received in the reorganizations. The actual number of shares to be received will depend upon the net asset value and number of shares outstanding of each Merging Series and the Surviving Series at the time of the reorganization. COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES The following discussion is a summary of some of the more significant similarities and differences in the investment objectives, policies and restrictions of the Surviving Series and each Merging Series. The discussion below is qualified in its entirety by the discussion elsewhere in this Prospectus/Proxy Statement, and in the Trust's Prospectus and Statement of Additional Information. INVESTMENT OBJECTIVES AND POLICIES The investment objectives of the Surviving Series and each Merging Series are similar. Even though MFS is intended to be the ultimate subadviser to the Surviving Series, the investment objective of the Surviving Series shall remain unchanged. The investment objectives of the Surviving Series and each Merging Series are "fundamental policies" which may not be changed without the approval of the holders of at least a "majority of the outstanding voting shares" of the Trust. A majority of the outstanding voting shares is defined in the 1940 Act as the lesser of (a) the vote of the holders of 67% or more of the outstanding voting shares of the Series present in person or by proxy, if the holders of more than 50% of the outstanding voting shares of that Series are present in person or by proxy, or represented by proxy, or (b) the vote of the holders of more than 50% of the outstanding voting shares of the Series. The principal investment strategies of the Surviving Series are also similar to the principal investment strategies of the Merging Series. Each principal investment strategy is not a fundamental policy requiring shareholder vote. As noted above, however, the Surviving Series is expected to be managed by MFS in conformity with the principal investment strategies currently deployed for the Phoenix-MFS Investors Growth Stock Series. 18 THE SURVIVING SERIES - PHOENIX-JANUS GROWTH SERIES
- ------------------------------------------------------- ---------------------------------------------------------------------------- Investment Objective Long-term growth of capital in a manner consistent with the preservation of capital. - ------------------------------------------------------- ---------------------------------------------------------------------------- Principal Investment Strategies The series invests primarily in equity securities selected for their growth potential. The series invests primarily in U.S. and foreign equity securities, which may include preferred stocks, common stocks, warrants and securities convertible into common or preferred stocks. The series may also invest to a lesser degree in other types of securities, including: o debt securities; o indexed/structured securities; and o high-yield (high-risk) bonds ("junk-bonds") less than 35% of the series' assets). Although the series can invest in companies of any size, it generally invests in larger, more established companies. The series may invest substantially all of its assets in common stocks if the subadviser believes that common stocks will appreciate in value. The subadviser generally takes a "bottom-up" approach to selecting companies. In other words, the subadviser seeks to identify individual companies with earnings growth potential that may not be recognized by the market at large. The subadviser makes this assessment by looking at companies one at a time, regardless of size, country of organization, place of principal business activity, or other similar selection criteria. Realization of income is not a significant consideration when choosing investments for the series. Income realized on the series' investments will be incidental to its objectives. The subadviser seeks companies that meet its selection criteria, regardless of where a company is located. Foreign securities are generally selected on a stock-by-stock basis without regard to any defined allocation among countries or geographic regions. However, certain factors such as expected levels of inflation, government policies influencing business conditions, the outlook for currency relationships, and prospects for economic growth among countries, regions or geographic areas may warrant greater consideration in selecting foreign securities. There are no limitations on the countries in which the series may invest and the series may at times have significant foreign exposure. - ------------------------------------------------------- ---------------------------------------------------------------------------- THE PHOENIX-VAN KAMPEN FOCUS EQUITY SERIES - ------------------------------------------------------- ---------------------------------------------------------------------------- Investment Objective Capital appreciation by investing primarily in equity securities. - ------------------------------------------------------- ----------------------------------------------------------------------------
19
- ------------------------------------------------------- ---------------------------------------------------------------------------- Principal Investment Strategies The series seeks to maximize capital appreciation by investing primarily in growth-oriented equity securities of U.S., and to a limited extent, foreign companies that are listed on U.S. exchanges or traded in U.S. markets. The series invests primarily in companies with market capitalizations of $10 billion or more that the subadviser believes exhibit strong earnings growth potential. The series normally invests at least 80% of its assets in a non-diversified portfolio of equity securities. These securities may include common and preferred stocks, depositary receipts, convertibles, rights, warrants, and equity related options and futures. The subadviser emphasizes individual security selection. The series generally concentrates its holdings in a relatively small number of companies and may invest up to 25% of its assets in a single issuer. The series will limit its use of derivatives for non-hedging purposes to 33-1/3% of its assets measured by the aggregate notional amount of outstanding derivatives. MSIM follows a flexible investment program in looking for companies with above average capital appreciation potential. Fundamental equity research drives the process. The subadviser focuses on companies with strong free cash flow potential, consistent or rising earnings growth records and compelling business strategies. The subadviser rigorously studies company developments, including business strategy, management focus and financial results, to identify companies with earnings growth and business momentum. Valuation is viewed in the context of prospects for sustainable earnings growth and the potential for positive earnings surprises in relation to consensus expectations. The series considers selling securities of issuers that no longer meet the subadviser's investment criteria. The subadviser's concentration in a relatively small number of companies may lead to an emphasis on particular industry sectors. - ------------------------------------------------------- ---------------------------------------------------------------------------- THE PHOENIX-MFS INVESTORS GROWTH STOCK SERIES - ------------------------------------------------------- ---------------------------------------------------------------------------- Investment Objective Long-term growth of capital and future income rather than current income. - ------------------------------------------------------- ---------------------------------------------------------------------------- Principal Investment Strategies The series invests, under normal market conditions, at least 80% of its assets in common stocks and related securities, such as preferred stocks, convertible securities and depositary receipts for those securities, of companies which the subadviser believes offer better than average prospects for long-term growth. MFS uses a bottom-up, as opposed to a top-down, investment style in managing the series. This means that securities are selected based upon fundamental analysis (such as an analysis of earnings, cash flows, competitive - ------------------------------------------------------- ----------------------------------------------------------------------------
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- ------------------------------------------------------- ---------------------------------------------------------------------------- position and management's abilities) performed by the series' portfolio manager and the subadviser's large group of equity research analysts. The series may invest up to 35% of its assets in foreign securities through which it may have exposure to foreign currencies. - ------------------------------------------------------- ----------------------------------------------------------------------------
CERTAIN INVESTMENT RESTRICTIONS Each Series is subject to identical investment restrictions (except (1) and (2) below with respect to the Phoenix-Van Kampen Focus Equity Series) that restrict the scope of their investments. These investment restrictions are "fundamental" policies. A "fundamental" policy is defined in the 1940 Act to mean that the restriction cannot be changed without the vote of a "majority of the outstanding voting shares" of the Series (as that term is defined in the 1940 Act). None of the Series' may: (1) with respect to 75% of its total assets, purchase securities of an issuer (other than the U.S. Government, its agencies, instrumentalities or authorities or repurchase agreements collateralized by U.S. Government securities and other investment companies), if: (a) such purchase would, at the time, cause more than 5% of the Series' total assets, taken at market value, to be invested in the securities of such issuer; or (b) such purchase would, at the time, result in more than 10% of the outstanding voting securities of such issuer being held by the Series (this restriction does not apply to the Phoenix-Van Kampen Focus Equity Series); (2) purchase securities in a given industry if, after giving effect to the purchase, more than 25% of its total assets would be invested in the securities of one or more issuers conducting business activities in the same industry (excluding the U.S. Government or its agencies or instrumentalities) (this restriction does not apply to the Phoenix-Van Kampen Focus Equity Series); (3) issue senior securities in contravention of the 1940 Act. Activities permitted by SEC exemptive orders or staff interpretations shall not be deemed prohibited by this restriction; (4) borrow money, except (i) in amounts not to exceed one third of the value of the Series' total assets (including the amount borrowed) from banks, and (ii) up to an additional 5% of its total assets from banks or other lenders for temporary purposes. For purposes of this restriction, (a) investment techniques such as margin purchases, short sales, forward commitments, and roll transactions, (b) investments in instruments such as futures contracts, swaps, and options, and (c) short-term credits extended in connection with trade clearances and settlement shall not constitute borrowing; (5) underwrite the securities issued by other persons, except to the extent that, in connection with the disposition of portfolio securities, a Series may be deemed to be an underwriter under the applicable law; (6) purchase or sell real estate, except that a Series may (i) acquire or lease office space for its own use, (ii) invest in securities of issuers that invest in real estate or interests therein, (iii) invest in mortgage-related securities and other securities that are secured by real estate or interests therein, or (iv) hold and sell real estate acquired by the Series as a result of the ownership of securities; (7) make loans, except that a Series may (i) lend portfolio securities, (ii) enter into repurchase agreements, (iii) purchase all or a portion of an issue of debt securities, bank loan participation interests, bank certificates of deposit, bankers' acceptances, debentures or other securities, whether or not the purchase is made upon the original issuance of the securities, and (iv) participate in an interfund lending program with other registered investment companies; and/or 21 (8) purchase or sell commodities or commodity contracts, except a Series may purchase and sell derivatives (including, but not limited to, options, futures contracts and options on futures contracts) whose value is tied to the value of a financial index or a financial instrument or other asset (including, but not limited to, securities indices, interest rates, securities, currencies and physical commodities). If any percentage restriction described above for the Series is adhered to at the time of investment, a subsequent increase or decrease in the percentage resulting from a change in the value of the Series' assets will not constitute a violation of the restriction. COMPARATIVE INFORMATION ON DISTRIBUTION ARRANGEMENTS The shares of the Trust are not directly offered to the public. Shares of the Trust are currently offered to certain separate accounts to fund variable accumulation annuity contracts or variable life insurance policies ("variable products") issued by Phoenix Life Insurance Company ("PLIC"), PHL Variable Insurance Company ("PHL Variable"), or Phoenix Life and Annuity Company ("PLAC") (collectively, "Phoenix"). Investments in the Trust may occur only by buying a variable product contract and directing the allocation of your payment(s) to the subaccount(s) corresponding to a Series. The subaccounts, in turn, invest in shares of the Trust. Not all Series may be offered through a particular variable product contract. Phoenix Equity Planning Corporation ("PEPCO"), is an indirect subsidiary of The Phoenix Companies, Inc. ("PNX"). PNX is the parent company of PLIC. PEPCO is also a broker-dealer registered with relevant regulators, serves as national distributor of variable products issued by these entities. Variable products may be purchased through broker-dealers registered with applicable regulatory authorities and who have entered into a sales agreement with PEPCO. Sales commissions will be paid to registered representatives based on the amount of premiums received in connection with the sale of variable products, subject to governing law. PLIC and its insurance company affiliates also pay commissions to PEPCO based on the amount of premiums received in connection with the sale of variable products, subject to governing law. COMPARATIVE INFORMATION ON SHAREHOLDER SERVICES Each Series offers the same shareholder services. Phoenix-Van Kampen Focus Equity Series and Phoenix-Janus Growth Series distributes net investment income quarterly and Phoenix-MFS Investors Growth Stock Series distributes net investment income semi-annually. Each Series distributes net realized capital gains, if any, at least annually. All dividends and distributions with respect to the shares of the Merging Series and the Surviving Series are paid in additional shares of the respective Series. The number of shares received in connection with any reinvestment of dividends will be based upon the net asset value per share of the applicable Series in effect on the record date. Each Series currently offer shareholders identical exchange privileges. Shareholders of each Series may exchange their shares for shares of a corresponding series of the Trust. Shares of the Surviving Series and each Merging Series may be redeemed at a redemption price equal to the net asset value of the shares as next determined following the receipt of a redemption order and any other required documentation in proper form. Payment of redemption proceeds for redeemed shares are generally made within seven days after receipt of a redemption request in proper form and documentation, provided that each check used for purchases of shares has been cleared for payment. Because each Series offers the same shareholder services, after the closing, the same services will continue to be available to the shareholders of each Merging Series but in their capacity as shareholders of the Surviving Series. COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS The following is a summary of certain provisions of the Amended Declaration of Trust of each Merging Series and the Surviving Series. 22 FORM OF ORGANIZATION Each Series is a series of the Trust, a business trust organized under the laws of the Commonwealth of Massachusetts, pursuant to a Declaration of Trust dated February 18, 1986, as amended. The operations of these Series are governed by the Declaration of Trust and by Massachusetts law. The shares of the Trust are registered with the SEC as an open-end management investment company and are subject to the provisions of the 1940 Act and the rules and regulations of the SEC thereunder. The Trustees may generally authorize mergers, consolidations, share exchanges and reorganizations of a new series or of each respective Series with another Series or other business organization subject to shareholder approval. SHARES The Declaration of Trust authorizes the Trustees to create an unlimited number of Series. The Trust currently has thirty-five series outstanding. The Trust may also organize other series in the future. When issued, the shares are fully paid and non-assessable, have no preference, preemptive or similar rights unless designated by the Trustees, and are freely transferable. The assets and proceeds received by the Trust from the issue or sale of shares of a Series are allocated to that Series and constitute the rights of that Series, subject only to the rights of creditors. Any underlying assets of a Series are required to be segregated on the books of account of the Trust. These assets are to be used to pay the expenses of the Series as well as a share of the general expenses of the Trust. MEETINGS The Trustees or President of the Trust may call shareholder meetings as necessary. To the extent required by the 1940 Act, meetings held for the purpose of voting on the removal of any trustee shall be called by the Trustees or upon written request by shareholders holding at least ten percent of the outstanding shares entitled to vote. SHAREHOLDER LIABILITY Unlike the stockholders of a corporation, under certain circumstances shareholders of a business trust may be held personally liable for the debts, claims or other obligations of a business trust. However, the Declaration of Trust limits shareholder liability. The Declaration of Trust provides that shareholders shall not be subject to any personal liability for the acts or obligations of the Trust. The Declaration of Trust provides for indemnification for any shareholder and any former shareholder who is exposed to liability by reason of a claim or demand relating to such person being a shareholder. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability, which is considered remote, is limited to circumstances in which the Trust itself would be unable to meet its obligations. LIABILITY OF TRUSTEES The Declaration of Trust provides that the Trustees will generally be personally liable only for willful misfeasance, bad faith, gross negligence or reckless disregard of duties. The Trust may purchase insurance for trustees to cover potential liabilities and will generally indemnify a trustee against such claims. The Trust may also advance payments to a trustee in connection with indemnification. LIQUIDATION OR DISSOLUTION In the event of the liquidation or dissolution of any Series, the Trustees shall distribute the assets of the Series to the shareholders, according to their respective rights, after accounting for the liabilities of the Trust. FISCAL YEAR The Series each operate on a fiscal year that ends December 31. 23 MANAGEMENT AND OTHER SERVICE PROVIDERS Responsibility for the overall supervision of all Series rests with Trustees. PVA serves as investment adviser to each Series, MSIM is the subadviser for the Phoenix-Van Kampen Focus Equity Series, Janus is the subadviser for the Phoenix-Janus Growth Series and MFS is the subadviser for the Surviving Series. MFS will replace Janus as subadviser for the Surviving Series upon completion of the proposed merger. A team of managers and analysts makes investment and trading decisions for both Series. The names and general information pertaining to each portfolio manager for both Series is described above and within the Prospectus for the Trust. The Surviving Series will be renamed the Phoenix-MFS Investors Growth Stock Series upon completion of the proposed merger. PEPCO serves as financial agent of each Series and, as such, performs administrative, bookkeeping and pricing functions. State Street Bank and Trust Company serves as the custodian for each Merging Series and the Surviving Series. PricewaterhouseCoopers LLP serves as independent accountants for each Series. VOTING INFORMATION QUORUM AND VOTING REQUIREMENTS This Prospectus/Proxy Statement is being furnished to the shareholders of the Merging Series in connection with the solicitation by the Board of Trustees of the Trust of proxies to be used at the meeting. Shareholders of record of each Merging Series at the close of business on December 20, 2002 ("Record Date") will be entitled to vote at the meeting or at any adjournments thereof. Each of the above shares is entitled to one vote, with proportionate voting for fractional shares. The record owners of the shares of each separate series of the Trust include the Phoenix Life Variable Universal Life Account, Phoenix Life and Annuity Variable Universal Life Account and the PHLVIC Variable Universal Life Account (collectively, the "VUL Accounts"), which fund variable life insurance policies, and the Phoenix Life Variable Accumulation Account and the PHL Variable Accumulation Account (collectively, the "VA Accounts"), which fund variable annuity contracts. Each shareholder of record at the close of business on the Record Date is entitled to a notice of the meeting and will be asked to instruct Phoenix how to vote at the Special Meeting or any adjourned or postponed session. No shareholder, to the Trust's knowledge, owns contracts which are funded by more than five percent of the outstanding voting shares of the Trust or of any Series. The number of votes with respect to which each shareholder will be entitled to instruct Phoenix will be determined by applying the shareholder's percentage interest in a subaccount to the total number of votes attributable to the subaccount. In determining the number of votes, fractional shares will be recognized. The number of votes for which a shareholder may provide instructions will be determined as of the Record Date. In accordance with its view of applicable law, Phoenix will vote the shares of the respective Merging Series for which Phoenix receives voting instructions from shareholders in accordance with those instructions. Phoenix will vote shares for which it has not received timely voting instructions from shareholders and any shares held by Phoenix or its affiliates for their own accounts in the same proportion as the shares for which shareholders have provided voting instructions to Phoenix. In addition to the proxy solicitation by mail, officers and regular employees of Phoenix or one of its affiliates may solicit voting instructions personally, by telephone or telegram. Phoenix will, upon request, reimburse banks, brokers, fiduciaries and nominees for their reasonable expenses in sending proxy materials. The cost of solicitation of voting instructions will be borne indirectly by Phoenix. You can provide voting instructions in any one of four ways: Through the Internet - www.proxyweb.com By telephone - (800) 690-6903 By mail - USING THE ENCLOSED VOTING INSTRUCTIONS CARD(S) AND POSTAGE PAID ENVELOPE 24 In Person - AT THE SPECIAL MEETING Proxies executed by shareholders may be revoked at any time before they are exercised by a written revocation received by the Secretary of the Trust, by properly executing a later-dated proxy or by attending the meeting and voting in person, by telephone or by the Internet. We encourage you to vote by Internet or telephone, using the account number that appears on your enclosed Voting Instructions Card. These voting methods will reduce the time and costs associated with this proxy solicitation. As of the Record Date, Phoenix owned 1,160,346.4044 shares of the Phoenix-Van Kampen Focus Equity Series, 725,846.5951 shares of the Phoenix-MFS Investors Growth Stock Series and 11,001,110.4021 shares of the Surviving Series. As of the Record Date, less than 1% of the outstanding shares of beneficial interest of either Series were held of record or beneficially owned under a contract or policy by the Trustees or nominees for election as Trustee and by the executive officers of the Trust, as a group. A COPY OF THE TRUST'S MOST RECENT ANNUAL REPORT, DATED DECEMBER 31, 2001 AND MOST RECENT SEMIANNUAL REPORT, DATED JUNE 30, 2002 HAVE PREVIOUSLY BEEN FURNISHED TO SHAREHOLDERS. THE TRUST WILL FURNISH WITHOUT CHARGE, TO ANY SHAREHOLDER, UPON REQUEST, A COPY OF THE 2001 ANNUAL REPORT AND THE 2002 SEMIANNUAL REPORT. SUCH REQUESTS MAY BE DIRECTED TO JEFFREY WEYGANT, PHOENIX VARIABLE PRODUCTS OPERATIONS, P.O. BOX 8027, BOSTON, MA 02266-8027. SHAREHOLDERS MAY ALSO CALL JEFFREY WEYGANT TOLL-FREE AT (800) 541-0171. The Board knows of no business, other than that mentioned in the Notice of Special Meeting, that will be presented for consideration at the Special Meeting. If any other matter is properly presented, it is the intention of the persons named on the enclosed Voting Instructions Card(s) to vote in accordance with their best judgment. A majority of the outstanding voting shares of a Series entitled to vote shall constitute a quorum for the meeting. The affirmative vote of a majority of the outstanding voting securities of the Trust (i.e., the lesser of (i) 67% or more of the eligible votes of the respective Merging Series represented at the meeting if more than 50% of the eligible votes of the respective Merging Series are present in person or by proxy or (ii) more than 50% of the eligible votes of the respective Merging Series) must approve the herein contemplated mergers. For purposes of determining the presence of a quorum for transacting business at the meeting and for determining whether sufficient votes have been received for approval of the proposal to be acted upon at the meeting, abstentions and broker "non-votes" (that is, proxies from brokers or nominees indicating that such persons have not received instructions from the beneficial owner or other persons entitled to vote shares on a particular matter with respect to which the brokers or nominees do not have discretionary power) will be treated as shares that are present at the meeting, but which have not been voted. For this reason, abstentions and broker non-votes will assist the respective Merging Series in obtaining a quorum, but both have the practical effect of a "no" vote for purposes of obtaining the requisite vote for approval of the proposal. If either (a) a quorum is not present at the meeting or (b) a quorum is present but sufficient votes in favor of the reorganization proposal have not been obtained, then the persons named as proxies may propose one or more adjournments of the meeting without further notice to shareholders to permit further solicitation of proxies provided such persons determine, after consideration of all relevant factors, including the nature of the proposal, the percentage of votes then cast, the percentage of negative votes then cast, the nature of the proposed solicitation activities and the nature of the reasons for such further solicitation, that an adjournment and additional solicitation is reasonable and in the interests of shareholders. The persons named as proxies will vote those proxies that such persons are required to vote FOR the reorganization proposals in favor of such an adjournment and will vote those proxies required to be voted AGAINST the reorganization proposals against such adjournment. The meeting may be adjourned from time to time by the vote of a majority of the shares represented at the meeting, whether or not a quorum is present. If the meeting is adjourned to another time or place, notice need not be given of the adjourned meeting at which the adjournment is taken, unless a new record date of the adjourned meeting is fixed or unless the adjournment is for more than sixty (60) days from the date set for the original meeting, 25 in which case the Trustees shall set a new record date. Notice of any such adjourned meeting shall be given to each shareholder of record entitled to vote at the adjourned. At any adjourned meeting, the Trust may transact any business which might have been transacted at the original meeting. The individuals named as proxies on the enclosed Voting Instructions Card will vote in accordance with the shareholder's direction, as indicated thereon, if the Voting Instructions Card is received and is properly executed. If the shareholder properly executes a Voting Instructions Card and gives no voting instructions with respect to a reorganization proposal, the shares will be voted in favor of the reorganization proposal. The proxies, in their discretion, may vote upon such other matters as may properly come before the meeting. The Trustees are not aware of any other matters to come before the meeting. Approval of the Phoenix-Van Kampen Focus Equity Series reorganization proposal by the shareholders of the Phoenix-Van Kampen Focus Equity Series is a condition of the consummation of the reorganization. If the reorganization is not approved, the Phoenix-Van Kampen Focus Equity Series will continue as a series of the Trust and the Trustees may consider other alternatives in the best interests of the shareholders of the Phoenix-Van Kampen Focus Equity Series. Approval of the Phoenix-MFS Investors Growth Stock Series reorganization proposal by the shareholders of the Phoenix-MFS Investors Growth Stock Series is a condition of the consummation of the reorganization. If the reorganization is not approved, the Phoenix-MFS Investors Growth Stock Series will continue as a series of the Trust and the Trustees may consider other alternatives in the best interests of the shareholders of the Phoenix-MFS Investors Growth Stock Series. REVOCATION OF PROXIES Any shareholder who has given an instruction card has the right to revoke the proxy any time prior to its exercise: o by written notice of the instruction card's revocation to the Secretary of the Trust at the above address prior to the meeting; o by the subsequent execution and return of another instruction card prior to the meeting; o by use of any electronic, telephonic or other alternative means authorized by the Trustees for authorizing the proxy to act; or o by being present and voting in person at the meeting and giving oral notice of revocation to the Chairman of the meeting. NO APPRAISAL RIGHTS The staff of the SEC has taken the position that any rights to appraisal arising under state law are preempted by the provisions of the 1940 Act and Rule 22c-1 thereunder, which generally requires that shares of a registered open-end investment company be valued at their next determined net asset value. SOLICITATION OF PROXIES In addition to solicitation of proxies by mail, officers and employees of PLIC or its affiliates, may solicit proxies personally or by telephone or telegram. PLIC or other representatives of the Trust may also use one or more proxy solicitation firms to assist with the mailing and tabulation effort and any special personal solicitation of instruction cards. Banks, brokers, fiduciaries and nominees will, upon request, be reimbursed by PLIC for their reasonable expenses in sending proxy material to be beneficial owners of shares of a Merging Series. The cost of the solicitation of proxies will be borne by PLIC. 26 If a shareholder wishes to participate in the meeting, but does not wish to authorize the execution of an instruction card by telephone, the shareholder may still submit the instruction card form included with this proxy statement or attend the meeting in person. THE BOARD OF TRUSTEES OF THE TRUST, INCLUDING THE INDEPENDENT TRUSTEES OF THE TRUST, RECOMMENDS YOU APPROVE EACH AGREEMENT AND PLAN OF REORGANIZATION. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE RESPOND PROMPTLY VIA INTERNET, TELEPHONE OR RETURN THE VOTING INSTRUCTIONS CARD IN THE POSTAGE PAID RETURN ENVELOPE. ADDITIONAL INFORMATION ABOUT THE SERIES Additional information about the Series is included in the Series' Prospectus, as supplemented and the Statement of Additional Information as supplemented dated August 9, 2002 (Registration No. 33-5033), which has been filed with the SEC and is incorporated by reference herein. A copy of the Prospectus, as supplemented and Statement of Additional Information as supplemented may be obtained without charge by contacting Phoenix Variable Products Mail Operations, P.O. Box 8027, Boston, Massachusetts 02266-8027, or by calling toll-free at 1-800-541-0171. MISCELLANEOUS AVAILABLE INFORMATION Each Series and the Trust are each registered under the 1940 Act and are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and the 1940 Act, and, in accordance therewith, file reports, proxy materials, and other information with the SEC. Information about the Trust, including the SAI, can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room by calling the SEC at (202) 942-8090. Reports and other information about the Trust are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov. Copies of the information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC Reference Section, Washington, D.C. 20549-0102. 27 PERFORMANCE FOR THE PERIOD ENDING SEPTEMBER 30, 2002 The following table compares investment performance for each Series for the period ending September 30, 2002 and compares the same against relevant benchmarks. The Series' past performance is not necessarily an indication of how the Series will perform in the future. The Series performance does not reflect insurance contract expenses. If these expenses were included, the Series' performance would be lower.
Average Annual Total Returns (for the period ending 1 Year Life of the Series Inception Date - ---------------------------- ------ ------------------ -------------- September 30, 2002) Surviving Series o Phoenix-Janus Growth Series (23.34%) (23.26%) 12/15/99 o S&P 500 Total Return Index(1) (20.48%) (16.81%) 12/15/99 Merging Series o Phoenix-Van Kampen Focus Equity Series (25.44%) (20.81%) 12/15/99 o S&P 500 Total Return Index(1) (20.48%) (16.81%) 12/15/99 o Phoenix-MFS Investors Growth Stock Series - (24.98%) 10/29/01 o S&P 500 Total Return Index(1) - (23.30%) 10/29/01 o Russell 1000 Growth Stock Index(2) (27.59%) 10/29/01
- ---------- (1) The S&P 500 Total Return Index is an unmanaged, commonly used measure of stock total performance which includes net dividends reinvested. The index is not available for direct investments. (2) The Russell 1000 Growth Stock Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The index is not available for direct investment. 28 GROWTH OF $10,000(1) (PERIOD ENDING SEPTEMBER 30, 2002)
Year Phoenix-MFS Investors Growth Stock Series Russell 1000 Growth Stock Series S&P 500 Total Return Index ---- ----------------------------------------- -------------------------------- -------------------------- 10/29/01 $10,000.00 $10,000.00 $10,000.00 09/30/02 $7,502.04 $7,240.64 $7,669.78 Year Phoenix-Van Kampen Focus Equity Series S&P 500 Total Return Index ---- -------------------------------------- -------------------------- 12/15/99 $10,000.00 $10,000.00 2000 $10,719.26 $10,248.23 2001 $6,986.38 $7,518.62 2002 $5,209.13 $5,987.76 Year Phoenix-Janus Growth Series S&P 500 Total Return Index ---- --------------------------- -------------------------- 12/15/99 $10,000.00 $10,000.00 2000 $11,208.70 $10,248.23 2001 $6,225.12 $7,518.62 2002 $4,772.47 $5,987.76
SECTOR WEIGHTINGS (as a percentage of equity holdings as of September 30, 2002) - -----------------
Phoenix-MFS Investors Phoenix-Van Kampen Phoenix-Janus Growth Sector Growth Stock Series Focus Equity Series Series - ------ ------------------- ------------------- ------ Information Technology $ 737,403.17 16.41% $1,153,466.20 19.89% $ 7,791,535.71 14.64% Health Care $1,154,043.70 25.68% $1,514,169.60 26.11% $ 9,506,291.61 17.86% Financials $ 524,002.30 11.66% $ 945,273.95 16.30% $ 12,017,893.45 22.58% Consumer Discretionary $ 925,880.30 20.60% $ 723,317.00 12.47% $ 12,050,611.01 22.65% Industrials $ 510,676.60 11.36% $ 360,249.50 6.21% $ 5,283,984.40 9.93% Consumer Staples $ 486,054.31 10.82% $ 692,002.50 11.93% $ 4,931,705.65 9.27% Telecommunication Services $ 18,015.00 0.40% $ 64,758.40 1.12% $ 0.00 0.00% Energy $ 117,709.70 2.62% $ 345,472.25 5.97% $ 1,631,277.50 3.07% Materials $ 19,932.90 0.45% $ 0.00 0.00% $ 0.00 0.00% Sum of Equity Holdings $4,493,717.98 100.00% $5,798,709.40 100.00% $ 53,213,299.13 100.00% - ---------- (1) This chart assumes an initial investment of $10,000 made on the inception dates noted in the tables above. Performance assumes dividends and capital gains are reinvested.
29 ASSET MIX AT SEPTEMBER 30, 2002 (as a percentage of total assets) - -------------------------------
Merging Series Merging Series Surviving Series Phoenix-MFS Investors Phoenix-Van Kampen Phoenix-Janus Growth Asset Mix Growth Stock Series Focus Equity Series Series - --------- ------------------- ------------------- ------ Agency Mortgage Backed 0.00% 0.00% 0.12% Cash (1.77%) (3.49%) 1.11% Common Stock 93.41% 91.27% 92.27% Convertible Bonds 0.00% 0.00% 0.17% Corporate Bonds 0.00% 0.00% 0.14% Foreign Common Stock 5.22% 0.00% 4.36% Short Terms 3.14% 12.22% 1.83% Total Net Assets 100.00% 100.00% 100.00% TEN LARGEST HOLDINGS AS OF SEPTEMBER 30, 2002 (as a percentage of total net assets)
Merging Series Merging Series Surviving Series -------------- -------------- ---------------- Phoenix-MFS Investors Growth Stock Phoenix-Van Kampen Focus Phoenix-Janus Growth Series ---------------------------------- ------------------------ --------------------------- Series Equity Series ------ ------------- Pfizer, Inc. 4.2% Microsoft Corp. 7.2% Microsoft Corp. 5.0% Microsoft Corp. 3.6% Pfizer, Inc. 5.9% Viacom, Inc. Class B 4.8% Johnson & Johnson 3.3% Freddie Mac 4.7% Pfizer, Inc. 4.7% Wal-Mart Stores, Inc. 3.0% Citigroup, Inc. 4.1% Fannie Mae 4.4% Northrop Grumman Corp. 2.6% Wal-Mart Stores, Inc. 4.0% Anheuser-Busch 4.0% Companies, Inc. SLM Corp. 2.5% Johnson & Johnson 3.7% Liberty Media Corp. 4.0% Class A Viacom, Inc. Class B 2.4% General Electric Co. 3.7% WellPoint Health 3.8% Networks, Inc. Tenet Healthcare Corp. 2.3% Proctor & Gamble Co. (The) 3.1% SLM Corp. 3.4% Harley-Davidson, Inc. 2.3% Exxon Mobil Corp. 2.7% Genentech, Inc. 3.4% 3M Co. 2.3% Dell Computer Corp. 2.6% Home Depot, Inc. (The) 3.0%
LEGAL MATTERS Richard J. Wirth, Counsel for PLIC and the Trust, has passed upon certain legal matters in connection with the issuance of the shares of the Surviving Series. ADDITIONAL FINANCIAL INFORMATION The table below presents certain financial information for the Surviving Series. The financial highlights for each year ended December 31 are derived from the Surviving Series' audited financial statements for that year. The financial highlights for the six months ended June 30, 2002 are unaudited. The data should be read in conjunction with the audited financial statements and related notes, which are included in the Statement of Additional Information related to this Prospectus/Proxy Statement. The financial statements for the Surviving Series for prior periods are contained in the Surviving Series' Annual Report to Shareholders which are included in the Statement of Additional Information related to this Prospectus Proxy/Statement. 30 FINANCIAL HIGHLIGHTS (UNAUDITED) (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) The financial highlights table is intended to help you understand the Phoenix-Janus Growth Series' financial performance since inception. Certain information reflects financial results for a single share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Series (assuming, reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, except the six months ended June 30, 2002 which is unaudited. This report and the Series' financial statement are included in the December 31, 2001 Annual Report, Semiannual Report for the period ended June 30, 2002 and in the Statement of Additional Information.
SIX MONTHS ENDED FROM INCEPTION 6/30/02 YEAR ENDED 12/15/99 TO (UNAUDITED) DECEMBER 31, 12/31/99 ------------ -------- 2001 2000 ---- ---- ------------------------------ Net asset value, beginning of period $ 7.16 $ 9.41 $ 10.60 $ 10.00 Income from investment operation Net investment income (loss) (0.01) (0.02)(5) 0.01 0.01 Net realized and unrealized gain (loss) (1.50) (2.23) (1.19) 0.59 --------------------------------------------------------------------- Total from investment operations (1.51) (2.25) (1.18) 0.60 --------------------------------------------------------------------- Less Distributions Dividends from net investment income - - (0.01) - --------------------------------------------------------------------- Total distributions - - (0.01) - --------------------------------------------------------------------- Change in net asset value (1.51) (2.25) (1.19) 0.60 --------------------------------------------------------------------- Net asset value, end of period $ 5.65 $ 7.16 $ 9.41 $ 10.60 ===================================================================== Total return (21.08)%(2) (23.84)% (11.17)% 6.00%(2) Ratios/supplemental data: Net assets, end of period (thousands) $ 69,858 $ 68,743 $ 69,508 $ 3,275 Ratio to average net assets of: Operating expenses(3) 1.07%(1) 1.00%(4) 1.00% 1.00%(1) Net investment income (0.20)%(1) (0.26)% 0.15% 1.61%(1) Portfolio turnover 37%(2) 35% 16% 0%(2)
- ---------- (1) Annualized. (2) Not annualized. (3) If the Investment adviser has not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.10%, 1.19%, 1.24% and 17.29% for the periods ended June 30, 2002, December 31, 2001, 2000 and 1999, respectively. (4) For the period ended December 31, 2001 the ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees, if expense offsets were included, the ratio would not significantly differ. (5) Computed using average shares outstanding. 31 FUTURE SHAREHOLDER MEETINGS As a Massachusetts business trust, the Trust does not hold shareholder meetings, unless required by the 1940 Act. There will be a Special Meeting of the Phoenix-Aberdeen New Asia Series Shareholders, January 27, 2003, to consider a proposal to approve an Agreement and Plan of Reorganization. Other than that meeting, the Trust does not anticipate holding a meeting of shareholders of the Series in 2003. Shareholders who wish to present a proposal for action at the next meeting should submit the proposal to: Richard J. Wirth Phoenix Life Insurance Company PO Box 5056 Hartford, CT 06102-5056 Proposals must be received a reasonable time prior to the date of the shareholder meeting to be considered for inclusion in the proxy materials for the meeting. Timely submission of a proposal does not, however, necessarily mean that the proposal will be submitted for consideration by shareholders. OTHER BUSINESS The Board of Trustees of the Trust knows of no business to be brought before the meeting other than the matters set forth in this Prospectus/Proxy Statement. Should any other matter requiring a vote of the Merging Series' shareholders arise, however, the proxies will vote thereon according to their best judgment in the interests of the Merging Series and the shareholders of the Merging Series. By Order of the Board of Trustees, RICHARD J. WIRTH Secretary Hartford, Connecticut January 23, 2003 32 APPENDIX A FORM OF AGREEMENT AND PLAN OF REORGANIZATION THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of this 14th day of February, 2003, by and between The Phoenix Edge Series Fund, a Massachusetts business trust (the "Trust"), with its principal place of business at 101 Munson Street, Greenfield, Massachusetts 01301, on behalf of the Phoenix-Janus Growth Series (the "Surviving Series"), a separate series of the Trust, and the Trust, on behalf of the Phoenix-Van Kampen Focus Equity Series (the "Merging Series"), another separate series of the Trust. This Agreement is intended to be and is adopted as a plan of reorganization and liquidation within the meaning of Section 368(a)(1) of the United States Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the "Reorganization") will consist of the transfer of all of the assets of the Merging Series to the Surviving Series in exchange solely for voting shares of beneficial interest of the Surviving Series (the "Surviving Series Shares"), the assumption by the Surviving Series of all liabilities of the Merging Series, and the distribution of the Surviving Series Shares to the shareholders of the Merging Series in complete liquidation of the Merging Series as provided herein, all upon the terms and conditions hereinafter set forth in this Agreement. The Merging Series and the Surviving Series are separate series of the Trust, an open-end, registered investment company of the management type. The Merging Series owns securities which generally are assets of the character in which the Surviving Series is permitted to invest. The Trustees of the Trust have determined, with respect to the Surviving Series, that the exchange of all of the assets of the Merging Series for Surviving Series Shares and the assumption of all liabilities of the Merging Series by the Surviving Series is in the best interests of the Surviving Series and its shareholders and that the interests of the existing shareholders of the Surviving Series would not be diluted as a result of this transaction. The Trustees of the Trust, have also determined, with respect to the Merging Series, that the exchange of all of the assets of the Merging Series for Surviving Series Shares and the assumption of all liabilities of the Merging Series by the Surviving Series is in the best interests of the Merging Series and its shareholders and that the interests of the existing shareholders of the Merging Series would not be diluted as a result of this transaction. NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows: 1. TRANSFER OF ASSETS OF THE MERGING SERIES TO THE SURVIVING SERIES IN EXCHANGE FOR THE SURVIVING SERIES SHARES, THE ASSUMPTION OF ALL MERGING SERIES LIABILITIES, THE LIQUIDATION OF THE MERGING SERIES AND THE RENAMING OF THE SURVIVING SERIES. 1.1 Subject to the requisite approval of the Merging Series shareholders and the other terms and conditions herein set forth and on the basis of the representations and warranties contained herein, the Merging Series agrees to transfer all of the Merging Series' assets, as set forth in paragraph 1.2, to the Surviving Series, and the Surviving Series agrees in exchange therefor: (i) to deliver to the Merging Series the number of full and fractional Surviving Series Shares, determined by dividing the value of the Merging Series' net assets, computed in the manner and as of the time and date set forth in paragraph 2.1, by the net asset value of one Surviving Series Share, computed in the manner and as of the time and date set forth in paragraph 2.2; and (ii) to assume all liabilities of the Merging Series, as set forth in paragraph 1.3. Such transactions shall take place at the closing provided for in paragraph 3.1 (the "Closing Date"). 1.2 The assets of the Merging Series to be acquired by the Surviving Series shall consist of all assets and property, including, without limitation, all cash, securities, commodities and futures interests and dividends or interests receivable, that are owned by the Merging Series, and any deferred or prepaid expenses shown as an asset on the books of the Merging Series, on the Closing Date (collectively, the "Assets"). A-1 1.3 The Merging Series will endeavor to discharge all of its known liabilities and obligations prior to the Closing Date. The Surviving Series shall also assume all of the liabilities of the Merging Series, whether accrued or contingent, known or unknown, existing at the Valuation Date, as defined in paragraph 2.1 (collectively, "Liabilities"). On or as soon as practicable prior to the Closing Date, the Merging Series will declare and pay to its shareholders of record one or more dividends and/or other distributions so that it will have distributed substantially all (and in no event less than 98%) of its investment company taxable income and realized net capital gain, if any, for the current taxable year through the Closing Date. 1.4 Immediately after the transfer of Assets provided for in paragraph 1.1, the Merging Series will distribute to the Merging Series' shareholders of record, determined as of immediately after the close of business on the Closing Date (the "Merging Series Shareholders"), on a pro rata basis, the Surviving Series Shares received by the Merging Series pursuant to paragraph 1.1, and will completely liquidate. Such distribution and liquidation will be accomplished, with respect to the Merging Series' shares, by the transfer of the Surviving Series Shares then credited to the account of the Merging Series on the books of the Surviving Series to open accounts on the share records of the Surviving Series in the names of the Merging Series Shareholders. The aggregate net asset value of Surviving Series Shares to be so credited to Merging Series Shareholders shall be equal to the aggregate net asset value of the Merging Series shares owned by such shareholders on the Closing Date. All issued and outstanding shares of the Merging Series will simultaneously be canceled on the books of the Merging Series. 1.5 Ownership of Surviving Series Shares will be shown on the books of the Surviving Series or its transfer agent, as defined in paragraph 3.3. 1.6 Any reporting responsibility of the Merging Series including, but not limited to, the responsibility for filing of regulatory reports, tax returns, or other documents with the U.S. Securities and Exchange Commission (the "Commission"), any state securities commission, and any federal, state or local tax authorities or any other relevant regulatory authority, is and shall remain the responsibility of the Merging Series. 1.7 On or as soon as practicable after the Closing Date, the Trust shall rename the Surviving Series "the Phoenix-MFS Investors Growth Stock Series." 2. VALUATION 2.1 The value of the Assets shall be the value computed as of immediately after the close of business of the New York Stock Exchange and after the declaration of any dividends on the Closing Date (such time and date being hereinafter called the "Valuation Date"), using the valuation procedures established by the Trust's Board of Trustees, which shall be described in the then-current prospectus and statement of additional information with respect to the Surviving Series. 2.2 The net asset value of Surviving Series Shares shall be the net asset value per share computed as of the Valuation Date, using the valuation procedures established by the Trust's Board of Trustees which shall be described in the Surviving Series' then-current prospectus and statement of additional information. 2.3 The number of Surviving Series Shares to be issued (including fractional shares, if any) in exchange for the Merging Series' Assets shall be determined by dividing the value of the net assets with respect to the shares of the Merging Series determined using the same valuation procedures referred to in paragraph 2.1, by the net asset value of a Surviving Series Share, determined in accordance with paragraph 2.2. 2.4 All computations of value shall be made by Phoenix Equity Planning Corporation, in its capacity as financial agent for the Trust. 3. CLOSING AND CLOSING DATE 3.1 The Closing Date shall be February 17, 2003, or such other date as the parties may agree. All acts taking place at the closing of the transaction (the "Closing") shall be deemed to take place simultaneously as of immediately after the close of business on the Closing Date unless otherwise agreed to by the parties. The close of business on the Closing Date shall be as of 4:00 p.m., Eastern Time. The Closing shall be held at the offices of the Trust or at such other time and/or place as the parties may agree. A-2 3.2 The Trust shall direct State Street Bank and Trust Company, as custodian for the Merging Series (the "Custodian"), to deliver, on the next business day after the Closing, a certificate of an authorized officer stating that (i) the Assets shall have been delivered in proper form to the Surviving Series on the next business day following the Closing Date, and (ii) all necessary taxes in connection with the delivery of the Assets, including all applicable federal and state stock transfer stamps, if any, have been paid or provision for payment has been made. The Merging Series' portfolio securities represented by a certificate or other written instrument shall be presented by the Merging Series Custodian to the custodian for the Surviving Series for examination no later than on the next business day following the Closing Date, and shall be transferred and delivered by the Merging Series on the next business day following the Closing Date for the account of the Surviving Series duly endorsed in proper form for transfer in such condition as to constitute good delivery thereof. The Custodian shall deliver as of the Closing Date by book entry, in accordance with the customary practices of such depositories and the Custodian, the Merging Series' portfolio securities and instruments deposited with a securities depository, as defined in Rule 17f-4 under the Investment Company Act of 1940, as amended (the "1940 Act"). The cash to be transferred by the Merging Series shall be delivered by wire transfer of federal funds on the Closing Date. 3.3 The Trust shall direct the Variable Products Operation unit of Phoenix Life Insurance Company (the "Transfer Agent"), on behalf of the Merging Series, to deliver on the next business day following the Closing, a certificate of an authorized officer stating that its records contain the names and addresses of the Merging Series Shareholders, and the number and percentage ownership of outstanding shares owned by each such shareholder immediately prior to the Closing. The Surviving Series shall issue and deliver a confirmation evidencing the Surviving Series Shares to be credited on the Closing Date to the Secretary of the Surviving Series, or provide evidence satisfactory to the Merging Series that such Surviving Series Shares have been credited to the Merging Series' account on the books of the Surviving Series. At the Closing each party shall deliver to the other such bills of sale, checks, assignments, share certificates, if any, receipts or other documents as such other party or its counsel may reasonably request. 3.4 In the event that on the Valuation Date (a) the New York Stock Exchange or another primary trading market for portfolio securities of the Surviving Series or the Merging Series shall be closed to trading or trading thereupon shall be restricted, or (b) trading or the reporting of trading on such Exchange or elsewhere shall be disrupted so that, in the judgment of the Board of Trustees of the Trust, accurate appraisal of the value of the net assets of the Surviving Series or the Merging Series, respectively, is impracticable, the Closing Date shall be postponed until the first Friday after the day when trading shall have been fully resumed and reporting shall have been restored. 4. REPRESENTATIONS AND WARRANTIES 4.1 The Trust, on behalf of the Merging Series, represents and warrants as follows: (a) The Merging Series is duly organized as a series of the Trust, which is a business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts, with power under the Trust's Declaration of Trust, as amended ("Declaration of Trust"), to own all of its Assets and to carry on its business as it is now being conducted; (b) The Trust is a registered investment company classified as a management company of the open-end type, and its registration with the Commission as an investment company under the 1940 Act, and the registration of shares of the Merging Series under the Securities Act of 1933, as amended ("1933 Act"), is in full force and effect; (c) No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Merging Series of the transactions contemplated herein, except such as have been obtained under the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act") and the 1940 Act and such as may be required by state securities laws; (d) The current prospectus and statement of additional information of the Merging Series and each prospectus and statement of additional information of the Merging Series used at all times previous to the date of this Agreement conforms or conformed at the time of its use in all material respects to the applicable requirements A-3 of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder; and does not or did not at the time of its use include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading; (e) On the Closing Date, the Trust, on behalf of the Merging Series, will have good and marketable title to the Assets and full right, power, and authority to sell, assign, transfer and deliver such Assets hereunder free of any liens or other encumbrances, and upon delivery and payment for such Assets; the Trust, on behalf of the Surviving Series, will acquire good and marketable title thereto, subject to no restrictions on the full transfer thereof, including such restrictions as might arise under the 1933 Act, other than as disclosed to the Surviving Series; (f) The Merging Series is not engaged currently, and the execution, delivery and performance of this Agreement will not result, in (i) a material violation of the Trust's Declaration of Trust or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Trust on behalf of the Merging Series is a party or by which it is bound, or (ii) the acceleration of any obligation, or the imposition of any penalty, under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Trust on behalf of the Merging Series is a party or by which it is bound; (g) All material contracts or other commitments of the Merging Series (other than this Agreement and certain investment contracts, including options, futures and forward contracts) will terminate without liability to the Merging Series on or prior to the Closing Date; (h) Except as otherwise disclosed in writing to and accepted by the Trust, on behalf of the Surviving Series, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or, to its knowledge, threatened against the Trust on behalf of the Merging Series or any of its properties or assets that, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business. The Trust, on behalf of the Merging Series, knows of no facts which might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions herein contemplated; (i) The Statement of Assets and Liabilities, Statements of Operations and Changes in Net Assets, and Schedule of Investments of the Merging Series at December 31, 2001, have been audited by PricewaterhouseCoopers, LLP ("PwC"), independent accountants, and are in accordance with generally accepted accounting principles ("GAAP") consistently applied, and such statements (copies of which have been furnished to the Surviving Series) present fairly, in all material respects, the financial condition of the Merging Series as of such date in accordance with GAAP, and there are no known contingent liabilities of the Merging Series required to be reflected on a balance sheet (including the notes thereto) in accordance with GAAP as of such date not disclosed therein; (j) Since December 31, 2001, there has not been any material adverse change in the Merging Series' financial condition, assets, liabilities or business, other than changes occurring in the ordinary course of business, or any incurrence by the Merging Series of indebtedness maturing more than one year from the date such indebtedness was incurred, except as otherwise disclosed to and accepted by the Surviving Series. For the purposes of this subparagraph (j), a decline in net asset value per share of the Merging Series due to declines in market values of securities in the Merging Series' portfolio, the discharge of Merging Series liabilities, or the redemption of Merging Series Shares by shareholders of the Merging Series shall not constitute a material adverse change; (k) On the Closing Date, all Federal and other tax returns, dividend reporting forms, and other tax-related reports of the Merging Series required by law to have been filed by such date (including any extensions) shall have been filed and are or will be correct in all material respects, and all Federal and other taxes shown as due or required to be shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof, and to the best of the Merging Series' knowledge, no such return is currently under audit and no assessment has been asserted with respect to such returns; A-4 (l) For each taxable year of its operation (including the taxable year ending on the Closing Date), the Merging Series has met (or will meet) the requirements of Subchapter M of the Code for qualification as a regulated investment company, has been (or will be) eligible to and has computed (or will compute) its federal income tax under Section 852 of the Code, and will have distributed all of its investment company taxable income and net capital gain (as defined in the Code) that has accrued through the Closing Date, and before the Closing Date will have declared dividends sufficient to distribute all of its investment company taxable income and net capital gain for the period ending on the Closing Date; (m) All issued and outstanding shares of the Merging Series are, and on the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable and have been offered and sold in every state and the District of Columbia in compliance in all material respects with applicable registration requirements of the 1933 Act and state securities laws. All of the issued and outstanding shares of the Merging Series will, at the time of Closing, be held by the persons and in the amounts set forth in the records of the Transfer Agent, on behalf of the Merging Series, as provided in paragraph 3.3. The Merging Series does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the shares of the Merging Series, nor is there outstanding any security convertible into any of the Merging Series shares; (n) The execution, delivery and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary action, if any, on the part of the Trustees of the Trust, on behalf of the Merging Series, and, subject to the approval of the shareholders of the Merging Series, this Agreement will constitute a valid and binding obligation of the Merging Series, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors' rights and to general equity principles; (o) The information to be furnished by the Merging Series for use in registration statements, proxy materials and other documents filed or to be filed with any federal, state or local regulatory authority (including the National Association of Securities Dealers, Inc.), which may be necessary in connection with the transactions contemplated hereby, shall be accurate and complete in all material respects and shall comply in all material respects with Federal securities and other laws and regulations thereunder applicable thereto; and (p) The proxy statement of the Merging Series (the "Proxy Statement") to be included in the Registration Statement referred to in paragraph 5.6, insofar as it relates to the Merging Series, will, on the effective date of the Registration Statement and on the Closing Date (i) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not materially misleading provided, however, that the representations and warranties in this subparagraph (p) shall not apply to statements in or omissions from the Proxy Statement and the Registration Statement made in reliance upon and in conformity with information that was furnished by the Surviving Series for use therein, and (ii) comply in all material respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder. 4.2 The Trust, on behalf of the Surviving Series, represents and warrants as follows: (a) The Surviving Series is duly organized as a series of the Trust, which is a business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts with power under the Trust's Declaration of Trust to own all of its Assets and to carry on its business as it is now being conducted; (b) The Trust is a registered investment company classified as a management company of the open-end type, and its registration with the Commission as an investment company under the 1940 Act and the registration of shares of the Surviving Series under the 1933 Act, is in full force and effect; (c) No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Surviving Series of the transactions contemplated herein, except such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state securities laws; A-5 (d) The current prospectus and statement of additional information of the Surviving Series and each prospectus and statement of additional information of the Surviving Series used during the three years previous to the date of this Agreement conforms or conformed at the time of its use in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and does not or did not at the time of its use include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading; (e) On the Closing Date, the Trust, on behalf of the Surviving Series will have good and marketable title to the Surviving Series' assets, free of any liens of other encumbrances, except those liens or encumbrances as to which the Merging Series has received notice and necessary documentation at or prior to the Closing; (f) The Surviving Series is not engaged currently, and the execution, delivery and performance of this Agreement will not result, in (i) a material violation of the Trust's Declaration of Trust or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Trust on behalf of the Surviving Series is a party or by which it is bound, or (ii) the acceleration of any obligation, or the imposition of any penalty, under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Trust on behalf of the Surviving Series is a party or by which it is bound; (g) Except as otherwise disclosed in writing to and accepted by the Trust, on behalf of the Merging Series, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or, to its knowledge, threatened against the Trust on behalf of the Surviving Series or any of the Surviving Series' properties or assets that, if adversely determined, would materially and adversely affect the Surviving Series' financial condition or the conduct of the Surviving Series' business. The Trust on behalf of the Surviving Series knows of no facts which might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects the Surviving Series' business or the Surviving Series' ability to consummate the transactions herein contemplated; (h) The Statement of Assets and Liabilities, Statements of Operations and Changes in Net Assets and Schedule of Investments of the Surviving Series at December 31, 2001, have been audited by PwC, independent accountants, and are in accordance with GAAP consistently applied, and such statements (copies of which have been furnished to the Merging Series) present fairly, in all material respects, the financial condition of the Surviving Series as of such date in accordance with GAAP, and there are no known contingent liabilities of the Surviving Series required to be reflected on a balance sheet (including the notes thereto) in accordance with GAAP as of such date not disclosed therein; (i) Since December 31, 2001, there has not been any material adverse change in the Surviving Series' financial condition, assets, liabilities or business, other than changes occurring in the ordinary course of business, or any incurrence by the Surviving Series of indebtedness maturing more than one year from the date such indebtedness was incurred, except as otherwise disclosed to and accepted by the Merging Series. For purposes of this subparagraph (i), a decline in net asset value per share of the Surviving Series due to declines in market values of securities in the Surviving Series' portfolio, the discharge of Surviving Series liabilities, or the redemption of Surviving Series Shares by shareholders of the Surviving Series, shall not constitute a material adverse change; (j) On the Closing Date, all Federal and other tax returns, dividend reporting forms, and other tax-related reports of the Surviving Series required by law to have been filed by such date (including any extensions) shall have been filed and are or will be correct in all material respects, and all Federal and other taxes shown as due or required to be shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof, and to the best of the Surviving Series' knowledge no such return is currently under audit and no assessment has been asserted with respect to such returns; (k) For each taxable year of its operation (including the taxable year including the Closing Date), the Surviving Series has met (or will meet) the requirements of Subchapter M of the Code for qualification as a A-6 regulated investment company has been eligible to and has computed (or will compute) its federal income tax under Section 852 of the Code; (l) All issued and outstanding Surviving Series Shares are, and on the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable (recognizing that, under Massachusetts law, it is theoretically possible that shareholders of the Merging Series could, under certain circumstances, be held personally liable for obligations of the Merging Series) and have been offered and sold in every state and the District of Columbia in compliance in all material respects with applicable registration requirements of the 1933 Act. The Surviving Series does not have outstanding any options, warrants or other rights to subscribe for or purchase any Surviving Series Shares, nor is there outstanding any security convertible into any Surviving Series Shares; (m) The execution, delivery and performance of this Agreement will have been fully authorized prior to the Closing Date by all necessary action, if any, on the part of the Trustees of the Trust on behalf of the Surviving Series and this Agreement will constitute a valid and binding obligation of the Trust on behalf of the Surviving Series, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors' rights and to general equity principles; (n) Surviving Series Shares to be issued and delivered to the Merging Series, for the account of the Merging Series Shareholders, pursuant to the terms of this Agreement, will on the Closing Date have been duly authorized and, when so issued and delivered, will be duly and validly issued Surviving Series Shares, and will be fully paid and non-assessable (recognizing that, under Massachusetts law, it is theoretically possible that shareholders of the Merging Series could, under certain circumstances, be held personally liable for obligations of the Merging Series); (o) The information to be furnished by the Trust for use in the registration statements, proxy materials and other documents that may be necessary in connection with the transactions contemplated hereby shall be accurate and complete in all material respects and shall comply in all material respects with Federal securities and other laws and regulations applicable thereto; and (p) That insofar as it relates to the Surviving Series, the Registration Statement relating to the Surviving Series Shares issuable hereunder, and the proxy materials of the Merging Series to be included in the Registration Statement, and any amendment or supplement to the foregoing, will, from the effective date of the Registration Statement through the date of the meeting of shareholders of the Merging Series contemplated therein (i) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not misleading provided, however, that the representations and warranties in this subparagraph (p) shall not apply to statements in or omissions from the Registration Statement made in reliance upon and in conformity with information that was furnished by the Merging Series for use therein, and (ii) comply in all material respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder. 5. COVENANTS OF THE TRUST ON BEHALF OF THE SURVIVING SERIES AND THE MERGING SERIES 5.1 The Surviving Series and the Merging Series each will operate its business in the ordinary course between the date hereof and the Closing Date, it being understood that such ordinary course of business will include the declaration and payment of customary dividends and distributions, and any other distribution that may be advisable. 5.2 The Trust will call a meeting of the shareholders of the Merging Series to consider and act upon this Agreement and to take all other action necessary to obtain approval of the transactions contemplated herein. 5.3 The Merging Series covenants that the Surviving Series Shares to be issued hereunder are not being acquired for the purpose of making any distribution thereof, other than in accordance with the terms of this Agreement. A-7 5.4 Subject to the provisions of this Agreement, the Surviving Series and the Merging Series will each take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement. 5.5 As soon as is reasonably practicable after the Closing, the Merging Series will make a liquidating distribution to its shareholders consisting of the Surviving Series Shares received at the Closing. 5.6 The Surviving Series and the Merging Series shall each use its reasonable best efforts to fulfill or obtain the fulfillment of the conditions precedent to effect the transactions contemplated by this Agreement as promptly as practicable. 5.7 The Trust, on behalf of the Merging Series, covenants that it will, from time to time, as and when reasonably requested by the Trust on behalf of the Surviving Series, execute and deliver or cause to be executed and delivered all such assignments and other instruments, and will take or cause to be taken such further action as the Trust on behalf of the Surviving Series may reasonably deem necessary or desirable in order to vest in and confirm (a) the Trust's, on behalf of the Merging Series', title to and possession of the Surviving Series Shares to be delivered hereunder, and (b) the Trust's, on behalf of the Surviving Series', title to and possession of all the assets, and to carry out the intent and purpose of this Agreement. 5.8 The Surviving Series will use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act and such of the state blue sky or securities laws as may be necessary in order to continue its operations after the Closing Date. 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE MERGING SERIES The obligations of the Trust, on behalf of the Merging Series, to consummate the transactions provided for herein shall be subject, at the Trust's election, to the performance by the Trust, on behalf of the Surviving Series, of all the obligations to be performed by it hereunder on or before the Closing Date, and, in addition thereto, the following further conditions: 6.1 All representations and warranties of the Trust, on behalf of the Surviving Series, contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date, with the same force and effect as if made on and as of the Closing Date; 6.2 The Trust, on behalf of the Surviving Series, shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by the Trust, on behalf of the Surviving Series on or before the Closing Date; 6.3 The Merging Series and the Surviving Series shall have agreed on the number of full and fractional Surviving Series Shares to be issued in connection with the Reorganization after such number has been calculated in accordance with paragraph 1.1. 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SURVIVING SERIES The obligations of the Trust, on behalf of the Surviving Series, to complete the transactions provided for herein shall be subject, at the Trust's election, to the performance by the Trust, on behalf of the Merging Series, of all of the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following conditions: 7.1 All representations and warranties of the Trust, on behalf of the Merging Series, contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date, with the same force and effect as if made on and as of the Closing Date; A-8 7.2 The Trust shall have delivered to the Surviving Series a statement of the Merging Series' assets and liabilities, as of the Closing Date, certified by the Treasurer of the Trust; 7.3 The Trust, on behalf of the Merging Series, shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by Trust, on behalf of the Merging Series, on or before the Closing Date; 7.4 The Merging Series and the Surviving Series shall have agreed on the number of full and fractional Surviving Series Shares to be issued in connection with the Reorganization after such number has been calculated in accordance with paragraph 1.1; and 7.5 The Merging Series shall have declared and paid a distribution or distributions prior to the Closing that, together with all previous distributions, shall have the effect of distributing to its shareholders (i) all of its investment company taxable income and all of its net realized capital gains, if any, for the period from the close of its last fiscal year to 4:00 p.m. Eastern time on the Closing; and (ii) any undistributed investment company taxable income and net realized capital gains from any period to the extent not otherwise already distributed. 8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SURVIVING SERIES AND THE MERGING SERIES If any of the conditions set forth below have not been satisfied on or before the Closing Date with respect to the Trust, on behalf of the Merging Series, or the Trust, on behalf of the Surviving Series, the other party to this Agreement shall, at its option, not be required to consummate the transactions contemplated by this Agreement: 8.1 The Agreement and the transactions contemplated herein shall have been approved by the requisite vote of the holders of the outstanding shares of the Merging Series in accordance with the provisions of the Trust's Declaration of Trust, applicable Massachusetts law and the 1940 Act. Notwithstanding anything herein to the contrary, neither the Trust may waive the conditions set forth in this paragraph 8.1; 8.2 On the Closing Date no action, suit or other proceeding shall be pending or, to its knowledge, threatened before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated herein; 8.3 All consents of other parties and all other consents, orders and permits of Federal, state and local regulatory authorities deemed necessary by the Trust to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of the Surviving Series or the Merging Series, provided that either party hereto may for itself waive any of such conditions; 8.4 The Registration Statement shall have become effective under the 1933 Act and no stop orders suspending the effectiveness thereof shall have been issued and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act; and 8.5 The parties shall have received the opinion of McDermott, Will & Emery, counsel to the Trust, addressed to the Trust substantially to the effect that, based upon certain facts, assumptions, and representations, the transaction contemplated by this Agreement, shall for federal income tax purposes, qualify as a tax free reorganization described in Section 368(a) of the Code. The delivery of such opinion is conditioned upon receipt of representations it shall request of the Trust. Notwithstanding anything herein to the contrary, the Trust may not waive the condition set forth in this paragraph 8.5. 9. BROKERAGE FEES AND EXPENSES 9.1 The Company on behalf of the Merging Series and the Trust on behalf of the Surviving Series represent and warrant to each other that there are no brokers or finders entitled to receive any payments in connection with the transactions provided for herein. A-9 9.2 The expenses relating to the proposed Reorganization will be borne by Phoenix Life Insurance Company. The costs of the Reorganization shall include, but not be limited to, costs associated with obtaining any necessary order of exemption from the 1940 Act, preparation of the Registration Statement, printing and distributing the Surviving Series' prospectus and the Merging Series' proxy materials, legal fees, accounting fees, securities registration fees, and expenses of holding shareholders' meetings. Notwithstanding any of the foregoing, expenses will in any event be paid by the party directly incurring such expenses if and to the extent that the payment by another person of such expenses would result in the disqualification of such party as a "regulated investment company" within the meaning of Section 851 of the Code. 10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES 10.1 The Trust has not made any representation, warranty or covenant not set forth herein; this Agreement constitutes the entire agreement between the parties. 10.2 The representations, warranties and covenants contained in this Agreement or in any document delivered pursuant hereto or in connection herewith shall survive the consummation of the transactions contemplated hereunder. The covenants to be performed after the Closing shall survive the Closing. 11. TERMINATION This Agreement may be terminated and the transactions contemplated hereby may be abandoned by either party by (i) mutual agreement of the parties, or (ii) by either party if the Closing shall not have occurred on or before June 30, 2003, unless such date is extended by mutual agreement of the parties, or (iii) by either party if the other party shall have materially breached its obligations under this Agreement or made a material and intentional misrepresentation herein or in connection herewith. In the event of any such termination, this Agreement shall become void and there shall be no liability hereunder on the part of any party or their respective Trustees or officers, except for any such material breach or intentional misrepresentation, as to each of which all remedies at law or in equity of the party adversely affected shall survive. 12. AMENDMENTS This Agreement may be amended, modified or supplemented in such manner as may be deemed necessary or advisable by the authorized officers of the Trust; provided, however, that following the meeting of the shareholders of the Merging Series called by the Merging Series pursuant to paragraph 5.2 of this Agreement, no such amendment may have the effect of changing the provisions for determining the number of the Surviving Series Shares to be issued to the Merging Series Shareholders under this Agreement to the detriment of such shareholders without their further approval. 13. NOTICES Any notice, report, statement or demand required or permitted by any provisions of this Agreement shall be in writing and shall be given by facsimile, personal service or prepaid or certified mail addressed to The Phoenix Edge Series Fund, One American Row, Hartford, CT 06102-5056, Attn: Richard J. Wirth, Esq. 14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY 14.1 The Article and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 14.2 This Agreement may be executed in any number of counterparts, each of which shall be deemed an original. 14.3 This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts without regard to its principles of conflicts of laws. 14.4 This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall A-10 be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement. 14.5 It is expressly agreed that the obligations of the parties hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents, or employees of the Trust personally, but shall bind only the trust property of the Surviving Series, as provided in the Declaration of Trust of the Trust. The execution and delivery by such officers shall not be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the trust property of such party as provided in the Declaration of Trust. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by its President or Vice President and its seal to be affixed thereto and attested by its Secretary or Assistant Secretary.
Attest: THE PHOENIX EDGE SERIES FUND ON BEHALF OF ITS PHOENIX-VAN KAMPEN FOCUS EQUITY SERIES __________________________________ By: _______________________________ SECRETARY Title: _______________________________ Attest: THE PHOENIX EDGE SERIES FUND ON BEHALF OF ITS PHOENIX-JANUS GROWTH SERIES __________________________________ By: _______________________________ SECRETARY Title: _______________________________
A-11 APPENDIX B FORM OF AGREEMENT AND PLAN OF REORGANIZATION THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of this 14th day of February, 2003, by and between The Phoenix Edge Series Fund, a Massachusetts business trust (the "Trust"), with its principal place of business at 101 Munson Street, Greenfield, Massachusetts 01301, on behalf of the Phoenix-Janus Growth Series (the "Surviving Series"), a separate series of the Trust, and the Trust, on behalf of the Phoenix-MFS Investors Growth Stock Series (the "Merging Series"), another separate series of the Trust. This Agreement is intended to be and is adopted as a plan of reorganization and liquidation within the meaning of Section 368(a)(1) of the United States Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the "Reorganization") will consist of the transfer of all of the assets of the Merging Series to the Surviving Series in exchange solely for voting shares of beneficial interest of the Surviving Series (the "Surviving Series Shares"), the assumption by the Surviving Series of all liabilities of the Merging Series, and the distribution of the Surviving Series Shares to the shareholders of the Merging Series in complete liquidation of the Merging Series as provided herein, all upon the terms and conditions hereinafter set forth in this Agreement. The Merging Series and the Surviving Series are separate series of the Trust, an open-end, registered investment company of the management type. The Merging Series owns securities which generally are assets of the character in which the Surviving Series is permitted to invest. The Trustees of the Trust have determined, with respect to the Surviving Series, that the exchange of all of the assets of the Merging Series for Surviving Series Shares and the assumption of all liabilities of the Merging Series by the Surviving Series is in the best interests of the Surviving Series and its shareholders and that the interests of the existing shareholders of the Surviving Series would not be diluted as a result of this transaction. The Trustees of the Trust, have also determined, with respect to the Merging Series, that the exchange of all of the assets of the Merging Series for Surviving Series Shares and the assumption of all liabilities of the Merging Series by the Surviving Series is in the best interests of the Merging Series and its shareholders and that the interests of the existing shareholders of the Merging Series would not be diluted as a result of this transaction. NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows: 1. TRANSFER OF ASSETS OF THE MERGING SERIES TO THE SURVIVING SERIES IN EXCHANGE FOR THE SURVIVING SERIES SHARES, THE ASSUMPTION OF ALL MERGING SERIES LIABILITIES, THE LIQUIDATION OF THE MERGING SERIES AND THE RENAMING OF THE SURVIVING SERIES. 1.1 Subject to the requisite approval of the Merging Series shareholders and the other terms and conditions herein set forth and on the basis of the representations and warranties contained herein, the Merging Series agrees to transfer all of the Merging Series' assets, as set forth in paragraph 1.2, to the Surviving Series, and the Surviving Series agrees in exchange therefor: (i) to deliver to the Merging Series the number of full and fractional Surviving Series Shares, determined by dividing the value of the Merging Series' net assets, computed in the manner and as of the time and date set forth in paragraph 2.1, by the net asset value of one Surviving Series Share, computed in the manner and as of the time and date set forth in paragraph 2.2; and (ii) to assume all liabilities of the Merging Series, as set forth in paragraph 1.3. Such transactions shall take place at the closing provided for in paragraph 3.1 (the "Closing Date"). 1.2 The assets of the Merging Series to be acquired by the Surviving Series shall consist of all assets and property, including, without limitation, all cash, securities, commodities and futures interests and dividends or interests receivable, that are owned by the Merging Series, and any deferred or prepaid expenses shown as an asset on the books of the Merging Series, on the Closing Date (collectively, the "Assets"). B-1 1.3 The Merging Series will endeavor to discharge all of its known liabilities and obligations prior to the Closing Date. The Surviving Series shall also assume all of the liabilities of the Merging Series, whether accrued or contingent, known or unknown, existing at the Valuation Date, as defined in paragraph 2.1 (collectively, "Liabilities"). On or as soon as practicable prior to the Closing Date, the Merging Series will declare and pay to its shareholders of record one or more dividends and/or other distributions so that it will have distributed substantially all (and in no event less than 98%) of its investment company taxable income and realized net capital gain, if any, for the current taxable year through the Closing Date. 1.4 Immediately after the transfer of Assets provided for in paragraph 1.1, the Merging Series will distribute to the Merging Series' shareholders of record, determined as of immediately after the close of business on the Closing Date (the "Merging Series Shareholders"), on a pro rata basis, the Surviving Series Shares received by the Merging Series pursuant to paragraph 1.1, and will completely liquidate. Such distribution and liquidation will be accomplished, with respect to the Merging Series' shares, by the transfer of the Surviving Series Shares then credited to the account of the Merging Series on the books of the Surviving Series to open accounts on the share records of the Surviving Series in the names of the Merging Series Shareholders. The aggregate net asset value of Surviving Series Shares to be so credited to Merging Series Shareholders shall be equal to the aggregate net asset value of the Merging Series shares owned by such shareholders on the Closing Date. All issued and outstanding shares of the Merging Series will simultaneously be canceled on the books of the Merging Series. 1.5 Ownership of Surviving Series Shares will be shown on the books of the Surviving Series or its transfer agent, as defined in paragraph 3.3. 1.6 Any reporting responsibility of the Merging Series including, but not limited to, the responsibility for filing of regulatory reports, tax returns, or other documents with the U.S. Securities and Exchange Commission (the "Commission"), any state securities commission, and any federal, state or local tax authorities or any other relevant regulatory authority, is and shall remain the responsibility of the Merging Series. 1.7 On or as soon as practicable after the Closing Date, the Trust shall rename the Surviving Series "the Phoenix-MFS Investors Growth Stock Series." 2. VALUATION 2.1 The value of the Assets shall be the value computed as of immediately after the close of business of the New York Stock Exchange and after the declaration of any dividends on the Closing Date (such time and date being hereinafter called the "Valuation Date"), using the valuation procedures established by the Trust's Board of Trustees, which shall be described in the then-current prospectus and statement of additional information with respect to the Surviving Series. 2.2 The net asset value of Surviving Series Shares shall be the net asset value per share computed as of the Valuation Date, using the valuation procedures established by the Trust's Board of Trustees which shall be described in the Surviving Series' then-current prospectus and statement of additional information. 2.3 The number of Surviving Series Shares to be issued (including fractional shares, if any) in exchange for the Merging Series' Assets shall be determined by dividing the value of the net assets with respect to the shares of the Merging Series determined using the same valuation procedures referred to in paragraph 2.1, by the net asset value of a Surviving Series Share, determined in accordance with paragraph 2.2. 2.4 All computations of value shall be made by Phoenix Equity Planning Corporation, in its capacity as financial agent for the Trust. 3. CLOSING AND CLOSING DATE 3.1 The Closing Date shall be February 17, 2003, or such other date as the parties may agree. All acts taking place at the closing of the transaction (the "Closing") shall be deemed to take place simultaneously as of immediately after the close of business on the Closing Date unless otherwise agreed to by the parties. The close of business on the Closing Date shall be as of 4:00 p.m., Eastern Time. The Closing shall be held at the offices of the Trust or at such other time and/or place as the parties may agree. B-2 3.2 The Trust shall direct State Street Bank and Trust Company, as custodian for the Merging Series (the "Custodian"), to deliver, on the next business day after the Closing, a certificate of an authorized officer stating that (i) the Assets shall have been delivered in proper form to the Surviving Series on the next business day following the Closing Date, and (ii) all necessary taxes in connection with the delivery of the Assets, including all applicable federal and state stock transfer stamps, if any, have been paid or provision for payment has been made. The Merging Series' portfolio securities represented by a certificate or other written instrument shall be presented by the Merging Series Custodian to the custodian for the Surviving Series for examination no later than on the next business day following the Closing Date, and shall be transferred and delivered by the Merging Series on the next business day following the Closing Date for the account of the Surviving Series duly endorsed in proper form for transfer in such condition as to constitute good delivery thereof. The Custodian shall deliver as of the Closing Date by book entry, in accordance with the customary practices of such depositories and the Custodian, the Merging Series' portfolio securities and instruments deposited with a securities depository, as defined in Rule 17f-4 under the Investment Company Act of 1940, as amended (the "1940 Act"). The cash to be transferred by the Merging Series shall be delivered by wire transfer of federal funds on the Closing Date. 3.3 The Trust shall direct the Variable Products Operation unit of Phoenix Life Insurance Company (the "Transfer Agent"), on behalf of the Merging Series, to deliver on the next business day following the Closing, a certificate of an authorized officer stating that its records contain the names and addresses of the Merging Series Shareholders, and the number and percentage ownership of outstanding shares owned by each such shareholder immediately prior to the Closing. The Surviving Series shall issue and deliver a confirmation evidencing the Surviving Series Shares to be credited on the Closing Date to the Secretary of the Surviving Series, or provide evidence satisfactory to the Merging Series that such Surviving Series Shares have been credited to the Merging Series' account on the books of the Surviving Series. At the Closing each party shall deliver to the other such bills of sale, checks, assignments, share certificates, if any, receipts or other documents as such other party or its counsel may reasonably request. 3.4 In the event that on the Valuation Date (a) the New York Stock Exchange or another primary trading market for portfolio securities of the Surviving Series or the Merging Series shall be closed to trading or trading thereupon shall be restricted, or (b) trading or the reporting of trading on such Exchange or elsewhere shall be disrupted so that, in the judgment of the Board of Trustees of the Trust, accurate appraisal of the value of the net assets of the Surviving Series or the Merging Series, respectively, is impracticable, the Closing Date shall be postponed until the first Friday after the day when trading shall have been fully resumed and reporting shall have been restored. 4. REPRESENTATIONS AND WARRANTIES 4.1 The Trust, on behalf of the Merging Series, represents and warrants as follows: (a) The Merging Series is duly organized as a series of the Trust, which is a business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts, with power under the Trust's Declaration of Trust, as amended ("Declaration of Trust"), to own all of its Assets and to carry on its business as it is now being conducted; (b) The Trust is a registered investment company classified as a management company of the open-end type, and its registration with the Commission as an investment company under the 1940 Act, and the registration of shares of the Merging Series under the Securities Act of 1933, as amended ("1933 Act"), is in full force and effect; (c) No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Merging Series of the transactions contemplated herein, except such as have been obtained under the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act") and the 1940 Act and such as may be required by state securities laws; (d) The current prospectus and statement of additional information of the Merging Series and each prospectus and statement of additional information of the Merging Series used at all times previous to the date of this Agreement conforms or conformed at the time of its use in all material respects to the applicable requirements B-3 of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder; and does not or did not at the time of its use include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading; (e) On the Closing Date, the Trust, on behalf of the Merging Series, will have good and marketable title to the Assets and full right, power, and authority to sell, assign, transfer and deliver such Assets hereunder free of any liens or other encumbrances, and upon delivery and payment for such Assets; the Trust, on behalf of the Surviving Series, will acquire good and marketable title thereto, subject to no restrictions on the full transfer thereof, including such restrictions as might arise under the 1933 Act, other than as disclosed to the Surviving Series; (f) The Merging Series is not engaged currently, and the execution, delivery and performance of this Agreement will not result, in (i) a material violation of the Trust's Declaration of Trust or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Trust on behalf of the Merging Series is a party or by which it is bound, or (ii) the acceleration of any obligation, or the imposition of any penalty, under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Trust on behalf of the Merging Series is a party or by which it is bound; (g) All material contracts or other commitments of the Merging Series (other than this Agreement and certain investment contracts, including options, futures and forward contracts) will terminate without liability to the Merging Series on or prior to the Closing Date; (h) Except as otherwise disclosed in writing to and accepted by the Trust, on behalf of the Surviving Series, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or, to its knowledge, threatened against the Trust on behalf of the Merging Series or any of its properties or assets that, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business. The Trust, on behalf of the Merging Series, knows of no facts which might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions herein contemplated; (i) The Statement of Assets and Liabilities, Statements of Operations and Changes in Net Assets, and Schedule of Investments of the Merging Series at December 31, 2001, have been audited by PricewaterhouseCoopers, LLP ("PwC"), independent accountants, and are in accordance with generally accepted accounting principles ("GAAP") consistently applied, and such statements (copies of which have been furnished to the Surviving Series) present fairly, in all material respects, the financial condition of the Merging Series as of such date in accordance with GAAP, and there are no known contingent liabilities of the Merging Series required to be reflected on a balance sheet (including the notes thereto) in accordance with GAAP as of such date not disclosed therein; (j) Since December 31, 2001, there has not been any material adverse change in the Merging Series' financial condition, assets, liabilities or business, other than changes occurring in the ordinary course of business, or any incurrence by the Merging Series of indebtedness maturing more than one year from the date such indebtedness was incurred, except as otherwise disclosed to and accepted by the Surviving Series. For the purposes of this subparagraph (j), a decline in net asset value per share of the Merging Series due to declines in market values of securities in the Merging Series' portfolio, the discharge of Merging Series liabilities, or the redemption of Merging Series Shares by shareholders of the Merging Series shall not constitute a material adverse change; (k) On the Closing Date, all Federal and other tax returns, dividend reporting forms, and other tax-related reports of the Merging Series required by law to have been filed by such date (including any extensions) shall have been filed and are or will be correct in all material respects, and all Federal and other taxes shown as due or required to be shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof, and to the best of the Merging Series' knowledge, no such return is currently under audit and no assessment has been asserted with respect to such returns; B-4 (l) For each taxable year of its operation (including the taxable year ending on the Closing Date), the Merging Series has met (or will meet) the requirements of Subchapter M of the Code for qualification as a regulated investment company, has been (or will be) eligible to and has computed (or will compute) its federal income tax under Section 852 of the Code, and will have distributed all of its investment company taxable income and net capital gain (as defined in the Code) that has accrued through the Closing Date, and before the Closing Date will have declared dividends sufficient to distribute all of its investment company taxable income and net capital gain for the period ending on the Closing Date; (m) All issued and outstanding shares of the Merging Series are, and on the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable and have been offered and sold in every state and the District of Columbia in compliance in all material respects with applicable registration requirements of the 1933 Act and state securities laws. All of the issued and outstanding shares of the Merging Series will, at the time of Closing, be held by the persons and in the amounts set forth in the records of the Transfer Agent, on behalf of the Merging Series, as provided in paragraph 3.3. The Merging Series does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the shares of the Merging Series, nor is there outstanding any security convertible into any of the Merging Series shares; (n) The execution, delivery and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary action, if any, on the part of the Trustees of the Trust, on behalf of the Merging Series, and, subject to the approval of the shareholders of the Merging Series, this Agreement will constitute a valid and binding obligation of the Merging Series, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors' rights and to general equity principles; (o) The information to be furnished by the Merging Series for use in registration statements, proxy materials and other documents filed or to be filed with any federal, state or local regulatory authority (including the National Association of Securities Dealers, Inc.), which may be necessary in connection with the transactions contemplated hereby, shall be accurate and complete in all material respects and shall comply in all material respects with Federal securities and other laws and regulations thereunder applicable thereto; and (p) The proxy statement of the Merging Series (the "Proxy Statement") to be included in the Registration Statement referred to in paragraph 5.6, insofar as it relates to the Merging Series, will, on the effective date of the Registration Statement and on the Closing Date (i) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not materially misleading provided, however, that the representations and warranties in this subparagraph (p) shall not apply to statements in or omissions from the Proxy Statement and the Registration Statement made in reliance upon and in conformity with information that was furnished by the Surviving Series for use therein, and (ii) comply in all material respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder. 4.2 The Trust, on behalf of the Surviving Series, represents and warrants as follows: (a) The Surviving Series is duly organized as a series of the Trust, which is a business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts with power under the Trust's Declaration of Trust to own all of its Assets and to carry on its business as it is now being conducted; (b) The Trust is a registered investment company classified as a management company of the open-end type, and its registration with the Commission as an investment company under the 1940 Act and the registration of shares of the Surviving Series under the 1933 Act, is in full force and effect; (c) No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Surviving Series of the transactions contemplated herein, except such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state securities laws; B-5 (d) The current prospectus and statement of additional information of the Surviving Series and each prospectus and statement of additional information of the Surviving Series used during the three years previous to the date of this Agreement conforms or conformed at the time of its use in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and does not or did not at the time of its use include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading; (e) On the Closing Date, the Trust, on behalf of the Surviving Series will have good and marketable title to the Surviving Series' assets, free of any liens of other encumbrances, except those liens or encumbrances as to which the Merging Series has received notice and necessary documentation at or prior to the Closing; (f) The Surviving Series is not engaged currently, and the execution, delivery and performance of this Agreement will not result, in (i) a material violation of the Trust's Declaration of Trust or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Trust on behalf of the Surviving Series is a party or by which it is bound, or (ii) the acceleration of any obligation, or the imposition of any penalty, under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Trust on behalf of the Surviving Series is a party or by which it is bound; (g) Except as otherwise disclosed in writing to and accepted by the Trust, on behalf of the Merging Series, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or, to its knowledge, threatened against the Trust on behalf of the Surviving Series or any of the Surviving Series' properties or assets that, if adversely determined, would materially and adversely affect the Surviving Series' financial condition or the conduct of the Surviving Series' business. The Trust on behalf of the Surviving Series knows of no facts which might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects the Surviving Series' business or the Surviving Series' ability to consummate the transactions herein contemplated; (h) The Statement of Assets and Liabilities, Statements of Operations and Changes in Net Assets and Schedule of Investments of the Surviving Series at December 31, 2001, have been audited by PwC, independent accountants, and are in accordance with GAAP consistently applied, and such statements (copies of which have been furnished to the Merging Series) present fairly, in all material respects, the financial condition of the Surviving Series as of such date in accordance with GAAP, and there are no known contingent liabilities of the Surviving Series required to be reflected on a balance sheet (including the notes thereto) in accordance with GAAP as of such date not disclosed therein; (i) Since December 31, 2001, there has not been any material adverse change in the Surviving Series' financial condition, assets, liabilities or business, other than changes occurring in the ordinary course of business, or any incurrence by the Surviving Series of indebtedness maturing more than one year from the date such indebtedness was incurred, except as otherwise disclosed to and accepted by the Merging Series. For purposes of this subparagraph (i), a decline in net asset value per share of the Surviving Series due to declines in market values of securities in the Surviving Series' portfolio, the discharge of Surviving Series liabilities, or the redemption of Surviving Series Shares by shareholders of the Surviving Series, shall not constitute a material adverse change; (j) On the Closing Date, all Federal and other tax returns, dividend reporting forms, and other tax-related reports of the Surviving Series required by law to have been filed by such date (including any extensions) shall have been filed and are or will be correct in all material respects, and all Federal and other taxes shown as due or required to be shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof, and to the best of the Surviving Series' knowledge no such return is currently under audit and no assessment has been asserted with respect to such returns; (k) For each taxable year of its operation (including the taxable year including the Closing Date), the Surviving Series has met (or will meet) the requirements of Subchapter M of the Code for qualification as a B-6 regulated investment company has been eligible to and has computed (or will compute) its federal income tax under Section 852 of the Code; (l) All issued and outstanding Surviving Series Shares are, and on the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable (recognizing that, under Massachusetts law, it is theoretically possible that shareholders of the Merging Series could, under certain circumstances, be held personally liable for obligations of the Merging Series) and have been offered and sold in every state and the District of Columbia in compliance in all material respects with applicable registration requirements of the 1933 Act. The Surviving Series does not have outstanding any options, warrants or other rights to subscribe for or purchase any Surviving Series Shares, nor is there outstanding any security convertible into any Surviving Series Shares; (m) The execution, delivery and performance of this Agreement will have been fully authorized prior to the Closing Date by all necessary action, if any, on the part of the Trustees of the Trust on behalf of the Surviving Series and this Agreement will constitute a valid and binding obligation of the Trust on behalf of the Surviving Series, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors' rights and to general equity principles; (n) Surviving Series Shares to be issued and delivered to the Merging Series, for the account of the Merging Series Shareholders, pursuant to the terms of this Agreement, will on the Closing Date have been duly authorized and, when so issued and delivered, will be duly and validly issued Surviving Series Shares, and will be fully paid and non-assessable (recognizing that, under Massachusetts law, it is theoretically possible that shareholders of the Merging Series could, under certain circumstances, be held personally liable for obligations of the Merging Series); (o) The information to be furnished by the Trust for use in the registration statements, proxy materials and other documents that may be necessary in connection with the transactions contemplated hereby shall be accurate and complete in all material respects and shall comply in all material respects with Federal securities and other laws and regulations applicable thereto; and (p) That insofar as it relates to the Surviving Series, the Registration Statement relating to the Surviving Series Shares issuable hereunder, and the proxy materials of the Merging Series to be included in the Registration Statement, and any amendment or supplement to the foregoing, will, from the effective date of the Registration Statement through the date of the meeting of shareholders of the Merging Series contemplated therein (i) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not misleading provided, however, that the representations and warranties in this subparagraph (p) shall not apply to statements in or omissions from the Registration Statement made in reliance upon and in conformity with information that was furnished by the Merging Series for use therein, and (ii) comply in all material respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder. 5. COVENANTS OF THE TRUST ON BEHALF OF THE SURVIVING SERIES AND THE MERGING SERIES 5.1 The Surviving Series and the Merging Series each will operate its business in the ordinary course between the date hereof and the Closing Date, it being understood that such ordinary course of business will include the declaration and payment of customary dividends and distributions, and any other distribution that may be advisable. 5.2 The Trust will call a meeting of the shareholders of the Merging Series to consider and act upon this Agreement and to take all other action necessary to obtain approval of the transactions contemplated herein. 5.3 The Merging Series covenants that the Surviving Series Shares to be issued hereunder are not being acquired for the purpose of making any distribution thereof, other than in accordance with the terms of this Agreement. B-7 5.4 Subject to the provisions of this Agreement, the Surviving Series and the Merging Series will each take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement. 5.5 As soon as is reasonably practicable after the Closing, the Merging Series will make a liquidating distribution to its shareholders consisting of the Surviving Series Shares received at the Closing. 5.6 The Surviving Series and the Merging Series shall each use its reasonable best efforts to fulfill or obtain the fulfillment of the conditions precedent to effect the transactions contemplated by this Agreement as promptly as practicable. 5.7 The Trust, on behalf of the Merging Series, covenants that it will, from time to time, as and when reasonably requested by the Trust on behalf of the Surviving Series, execute and deliver or cause to be executed and delivered all such assignments and other instruments, and will take or cause to be taken such further action as the Trust on behalf of the Surviving Series may reasonably deem necessary or desirable in order to vest in and confirm (a) the Trust's, on behalf of the Merging Series', title to and possession of the Surviving Series Shares to be delivered hereunder, and (b) the Trust's, on behalf of the Surviving Series', title to and possession of all the assets, and to carry out the intent and purpose of this Agreement. 5.8 The Surviving Series will use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act and such of the state blue sky or securities laws as may be necessary in order to continue its operations after the Closing Date. 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE MERGING SERIES The obligations of the Trust, on behalf of the Merging Series, to consummate the transactions provided for herein shall be subject, at the Trust's election, to the performance by the Trust, on behalf of the Surviving Series, of all the obligations to be performed by it hereunder on or before the Closing Date, and, in addition thereto, the following further conditions: 6.1 All representations and warranties of the Trust, on behalf of the Surviving Series, contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date, with the same force and effect as if made on and as of the Closing Date; 6.2 The Trust, on behalf of the Surviving Series, shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by the Trust, on behalf of the Surviving Series on or before the Closing Date; 6.3 The Merging Series and the Surviving Series shall have agreed on the number of full and fractional Surviving Series Shares to be issued in connection with the Reorganization after such number has been calculated in accordance with paragraph 1.1. 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SURVIVING SERIES The obligations of the Trust, on behalf of the Surviving Series, to complete the transactions provided for herein shall be subject, at the Trust's election, to the performance by the Trust, on behalf of the Merging Series, of all of the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following conditions: 7.1 All representations and warranties of the Trust, on behalf of the Merging Series, contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date, with the same force and effect as if made on and as of the Closing Date; B-8 7.2 The Trust shall have delivered to the Surviving Series a statement of the Merging Series' assets and liabilities, as of the Closing Date, certified by the Treasurer of the Trust; 7.3. The Trust, on behalf of the Merging Series, shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by Trust, on behalf of the Merging Series, on or before the Closing Date; 7.4 The Merging Series and the Surviving Series shall have agreed on the number of full and fractional Surviving Series Shares to be issued in connection with the Reorganization after such number has been calculated in accordance with paragraph 1.1; and 7.5 The Merging Series shall have declared and paid a distribution or distributions prior to the Closing that, together with all previous distributions, shall have the effect of distributing to its shareholders (i) all of its investment company taxable income and all of its net realized capital gains, if any, for the period from the close of its last fiscal year to 4:00 p.m. Eastern time on the Closing; and (ii) any undistributed investment company taxable income and net realized capital gains from any period to the extent not otherwise already distributed. 8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SURVIVING SERIES AND THE MERGING SERIES If any of the conditions set forth below have not been satisfied on or before the Closing Date with respect to the Trust, on behalf of the Merging Series, or the Trust, on behalf of the Surviving Series, the other party to this Agreement shall, at its option, not be required to consummate the transactions contemplated by this Agreement: 8.1 The Agreement and the transactions contemplated herein shall have been approved by the requisite vote of the holders of the outstanding shares of the Merging Series in accordance with the provisions of the Trust's Declaration of Trust, applicable Massachusetts law and the 1940 Act. Notwithstanding anything herein to the contrary, neither the Trust may waive the conditions set forth in this paragraph 8.1; 8.2 On the Closing Date no action, suit or other proceeding shall be pending or, to its knowledge, threatened before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated herein; 8.3 All consents of other parties and all other consents, orders and permits of Federal, state and local regulatory authorities deemed necessary by the Trust to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of the Surviving Series or the Merging Series, provided that either party hereto may for itself waive any of such conditions; 8.4 The Registration Statement shall have become effective under the 1933 Act and no stop orders suspending the effectiveness thereof shall have been issued and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act; and 8.5 The parties shall have received the opinion of McDermott, Will & Emery, counsel to the Trust, addressed to the Trust substantially to the effect that, based upon certain facts, assumptions, and representations, the transaction contemplated by this Agreement, shall for federal income tax purposes, qualify as a tax free reorganization described in Section 368(a) of the Code. The delivery of such opinion is conditioned upon receipt of representations it shall request of the Trust. Notwithstanding anything herein to the contrary, the Trust may not waive the condition set forth in this paragraph 8.5. 9. BROKERAGE FEES AND EXPENSES 9.1 The Company on behalf of the Merging Series and the Trust on behalf of the Surviving Series represent and warrant to each other that there are no brokers or finders entitled to receive any payments in connection with the transactions provided for herein. B-9 9.2 The expenses relating to the proposed Reorganization will be borne by Phoenix Life Insurance Company. The costs of the Reorganization shall include, but not be limited to, costs associated with obtaining any necessary order of exemption from the 1940 Act, preparation of the Registration Statement, printing and distributing the Surviving Series' prospectus and the Merging Series' proxy materials, legal fees, accounting fees, securities registration fees, and expenses of holding shareholders' meetings. Notwithstanding any of the foregoing, expenses will in any event be paid by the party directly incurring such expenses if and to the extent that the payment by another person of such expenses would result in the disqualification of such party as a "regulated investment company" within the meaning of Section 851 of the Code. 10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES 10.1 The Trust has not made any representation, warranty or covenant not set forth herein; this Agreement constitutes the entire agreement between the parties. 10.2 The representations, warranties and covenants contained in this Agreement or in any document delivered pursuant hereto or in connection herewith shall survive the consummation of the transactions contemplated hereunder. The covenants to be performed after the Closing shall survive the Closing. 11. TERMINATION This Agreement may be terminated and the transactions contemplated hereby may be abandoned by either party by (i) mutual agreement of the parties, or (ii) by either party if the Closing shall not have occurred on or before June 30, 2003, unless such date is extended by mutual agreement of the parties, or (iii) by either party if the other party shall have materially breached its obligations under this Agreement or made a material and intentional misrepresentation herein or in connection herewith. In the event of any such termination, this Agreement shall become void and there shall be no liability hereunder on the part of any party or their respective Trustees or officers, except for any such material breach or intentional misrepresentation, as to each of which all remedies at law or in equity of the party adversely affected shall survive. 12. AMENDMENTS This Agreement may be amended, modified or supplemented in such manner as may be deemed necessary or advisable by the authorized officers of the Trust; provided, however, that following the meeting of the shareholders of the Merging Series called by the Merging Series pursuant to paragraph 5.2 of this Agreement, no such amendment may have the effect of changing the provisions for determining the number of the Surviving Series Shares to be issued to the Merging Series Shareholders under this Agreement to the detriment of such shareholders without their further approval. 13. NOTICES Any notice, report, statement or demand required or permitted by any provisions of this Agreement shall be in writing and shall be given by facsimile, personal service or prepaid or certified mail addressed to The Phoenix Edge Series Fund, One American Row, Hartford, CT 06102-5056, Attn: Richard J. Wirth, Esq. 14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY 14.1 The Article and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 14.2 This Agreement may be executed in any number of counterparts, each of which shall be deemed an original. 14.3 This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts without regard to its principles of conflicts of laws. 14.4 This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall B-10 be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement. 14.5 It is expressly agreed that the obligations of the parties hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents, or employees of the Trust personally, but shall bind only the trust property of the Surviving Series, as provided in the Declaration of Trust of the Trust. The execution and delivery by such officers shall not be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the trust property of such party as provided in the Declaration of Trust. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by its President or Vice President and its seal to be affixed thereto and attested by its Secretary or Assistant Secretary.
Attest: THE PHOENIX EDGE SERIES FUND ON BEHALF OF ITS PHOENIX-JANUS GROWTH SERIES __________________________________ By: _______________________________ SECRETARY Title: _______________________________ Attest: THE PHOENIX EDGE SERIES FUND ON BEHALF OF ITS PHOENIX-MFS INVESTORS GROWTH STOCK SERIES __________________________________ By: _______________________________ SECRETARY Title: _______________________________
B-11 PART B ACQUISITION OF THE ASSETS OF PHOENIX-VAN KAMPEN FOCUS EQUITY SERIES AND PHOENIX-MFS INVESTORS GROWTH STOCK SERIES BY AND IN EXCHANGE FOR SHARES OF PHOENIX-JANUS GROWTH SERIES ALL SERIES OF THE PHOENIX EDGE SERIES FUND STATEMENT OF ADDITIONAL INFORMATION 101 Munson Street January 23, 2003 Greenfield, Massachusetts 01301 (800) 541-0171 This Statement of Additional Information, relating specifically to the proposed transfer of all of the assets and all the liabilities of Phoenix-Van Kampen Focus Equity Series (the "Phoenix Van Kampen Focus Equity Merging Series") and Phoenix-MFS Investors Growth Stock Series (the "Phoenix-MFS Investors Growth Stock Merging Series") all series of The Phoenix Edge Series Fund to the Phoenix-Janus Growth Stock Series (the "Surviving Series") each a series of The Phoenix Edge Series Fund, consists of this cover page and the following described documents, each of which is attached and incorporated: 1) the Statement of Additional Information of The Phoenix Edge Series Fund dated August 9, 2002, as supplemented (Registration No. 33-5033); 2) the Annual Report of The Phoenix Edge Series Fund for the year ended December 31, 2001; 3) Semiannual Report of The Phoenix Edge Series Fund for the six-month period ended June 30, 2002; and 4) the Pro Forma Financial Statements. This Statement of Additional Information, which is not a prospectus, supplements, and should be read in conjunction with, the Prospectus/Proxy Statement dated January 23, 2003. A copy of the Prospectus/Proxy Statement may be obtained without charge by calling Variable Products Operations ("VPO") at 800-541-0171 or by writing to Phoenix Variable Products Mail Operations at PO Box 8027, Boston, Massachusetts 02266-8027. THE PHOENIX EDGE SERIES FUND SUPPLEMENT TO THE STATEMENT OF ADDITIONAL INFORMATION DATED AUGUST 9, 2002 The Board of Trustees of The Phoenix Edge Series Fund (the "Fund") has accepted the resignation of Timothy P. Shriver as a Trustee of the Fund. All references in the Statement of Additional Information to Timothy P. Shriver no longer apply. Dated: November 11, 2002 Please keep this supplement for future reference. TF800 THE PHOENIX EDGE SERIES FUND HOME OFFICE: PHOENIX VARIABLE PRODUCTS 101 Munson Street MAIL OPERATIONS ("VPMO"): Greenfield, Massachusetts PO Box 8027 Boston, MA 02266-8027 STATEMENT OF ADDITIONAL INFORMATION August 9, 2002 This Statement of Additional Information ("SAI") is not a prospectus. Much of the information contained in this SAI expands upon subjects discussed in the current prospectus for The Phoenix Edge Series Fund (the "Fund") dated August 9, 2002 (hereinafter called the "prospectus"). Accordingly, the SAI should be read together with the prospectus, which may be obtained free of charge by calling Variable Products Operations ("VPO") at 800/541-0171 or by writing to VPMO at the address above. The financial statements can be found in the Fund's Annual and Semiannual Reports to shareholders, which are incorporated by reference. Copies of the Annual and Semiannual Reports have been delivered to shareholders and are available without charge, upon request. The contents of this SAI are incorporated by reference in the prospectus in their entirety. TABLE OF CONTENTS PAGE ---- The Fund ............................................................. 2 Permitted Investments and Risk Factors ............................... 2 Additional Investment Policies of Certain Series...................... 21 Investment Restrictions............................................... 26 Portfolio Turnover.................................................... 27 Management of the Fund ............................................... 28 The Investment Advisors and Subadvisors............................... 33 Custodian ............................................................ 40 Foreign Custodian .................................................... 41 Independent Accountants .............................................. 41 Financial Agent....................................................... 41 Code of Ethics........................................................ 41 Brokerage Allocation ................................................. 41 Determination of Net Asset Value ..................................... 42 Investing in the Fund ................................................ 43 Redemption of Shares ................................................. 43 Taxes ................................................................ 43 Disclaimer............................................................ 44 Financial Statements ................................................. 45 Appendix.............................................................. 46 THE FUND - -------------------------------------------------------------------------------- The Fund is an open-end, management investment company as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), currently offering 37 series. It was formed on February 18, 1986 as a Massachusetts business trust and commenced operations on December 5, 1986. All of the series described in this SAI are classified as diversified under the 1940 Act, except for the following series which are non-diversified: Phoenix-Deutsche Dow 30 Series, Phoenix-Deutsche Nasdaq-100 Index(R) Series, Phoenix-Duff & Phelps Real Estate Securities Series, and Phoenix-Van Kampen Focus Equity Series. Shares in each series of the Fund are available to the following insurance company separate accounts: [diamond] The Phoenix Life Variable Accumulation Account, a separate account of Phoenix Life Insurance Company ("Phoenix") established on June 21, 1982; [diamond] The Phoenix Life Variable Universal Life Account, a separate account of Phoenix established on June 17, 1985; [diamond] The PHL Variable Accumulation Account, a separate account of PHL Variable Insurance Company ("PHL Variable") established on December 7, 1994; [diamond] The PHL Variable Universal Life Account, a separate account of PHL Variable established on September 10, 1998; [diamond] The Phoenix Life and Annuity Variable Universal Life Account, a separate account of Phoenix Life and Annuity Company ("PLAC") established on July 1, 1996. The executive offices of the Accounts, Phoenix, PHL Variable and PLAC are located at One American Row, P.O. Box 5056, Hartford, Connecticut 06102-5056. The Accounts own all of the shares of the Fund. PERMITTED INVESTMENTS AND RISK FACTORS - -------------------------------------------------------------------------------- The investment objectives, principal investment strategies and principal risks are set forth in the prospectus. The following supplements that information. All of the series described in this SAI may invest in the following investments unless specifically noted otherwise. Additional information detailing investment policies that apply to one or more individual series is set forth below and is intended to supplement information in the prospectus. Any percentage limitations noted are based on market value at the time of investment. Unless otherwise stated in the prospectus, many investment techniques are discretionary. That means the advisors or subadvisors may elect to engage or not engage in the various techniques at their sole discretion. Investors should not assume that any particular discretionary investment technique or strategy will be employed at all times, or ever employed. BANKERS' ACCEPTANCES A banker's acceptance is a time draft drawn on a commercial bank by a borrower usually in connection with an international commercial transaction (to finance the import, export, transfer or storage of goods). The borrower, as well as the bank, is liable for payment, and the bank unconditionally guarantees to pay the draft at its face amount on the maturity date. Most acceptances have maturities of 6 months or less and are traded in secondary markets prior to maturity. BRADY BONDS Brady Bonds are securities created through the exchange of existing commercial bank loans to public and private entities in certain emerging markets for new bonds in connection with debt restructurings under a debt restructuring plan introduced by former U.S. Secretary of the Treasury, Nicholas F. Brady (the "Brady Plan"). Brady Plan debt restructurings have been implemented to date in Argentina, Brazil, Bulgaria, Costa Rica, Croatia, Dominican Republic, Ecuador, Jordan, Mexico, Morocco, Nigeria, Panama, Peru, the Philippines, Poland, Slovenia, Uruguay and Venezuela. Brady Bonds have been issued only recently, and for that reason do not have a long payment history. Brady Bonds may be collateralized or uncollateralized, are issued in various currencies (but primarily the U.S. dollar) and are actively traded in over-the-counter secondary markets. U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate bonds or floating-rate bonds, are generally collateralized in full as to principal by U.S. Treasury zero coupon bonds having the same maturity as the bonds. Brady Bonds are often viewed as having three or four valuation components: the collateralized repayment of principal at final maturity; the collateralized interest payments; the uncollateralized interest payments; and any uncollateralized repayment of principal at maturity (these uncollateralized amounts constituting the "residual risk"). In light of the residual risk of Brady Bonds and the history of defaults of countries issuing Brady Bonds with respect to commercial bank loans by public and private entities, investments in Brady Bonds may be viewed as speculative. CERTIFICATES OF DEPOSIT Certificates of deposit are generally short-term, interest-bearing negotiable certificates issued by banks or savings and loan associations against funds deposited in the issuing institution. COMMERCIAL BANK OBLIGATIONS For the purposes of each series' investment policies with respect to bank obligations, obligations of foreign branches of U.S. banks and of foreign banks are obligations of the issuing bank and may be general obligations of the parent bank. Such obligations, however, may be limited by the terms of a specific obligation and by government regulation. As with investment in non-U.S. 2 securities in general, investments in the obligations of foreign branches of U.S. banks and of foreign banks may subject the series to investment risks that are different in some respects from those of investments in obligations of domestic issuers. Although a series typically will acquire obligations issued and supported by the credit of U.S. or foreign banks having total assets at the time of purchase of $1 billion or more, this $1 billion figure is not an investment policy or restriction of any series. For the purposes of calculation with respect to the $1 billion figure, the assets of a bank will be deemed to include the assets of its U.S. and non-U.S. branches. COMMERCIAL PAPER Commercial paper refers to short-term, unsecured promissory notes issued by corporations to finance short-term credit needs. Commercial paper is usually sold on a discount basis and has maturity at the time of issuance not exceeding 9 months. CONVERTIBLE SECURITIES A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount of common stock of the same or a different issuer within a particular period of time at a specific price or formula. A convertible security entitles the holder to receive interest generally paid or accrued on debt or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Convertible securities have several unique investment characteristics such as (1) higher yields than common stocks, but lower yields than comparable nonconvertible securities, (2) a lesser degree of fluctuation in value then the underlying stock since they have fixed income characteristics and (3) the potential for capital appreciation if the market price of the underlying common stock increases. Up to 5% of each series' assets may be invested in convertible securities that are rated below investment grade (commonly referred to as "junk" securities). Such securities present greater credit and market risks than investment grade securities. (This 5% restriction does not apply to the Phoenix-Janus Flexible Income or Phoenix-Janus Growth Series.) A convertible security might be subject to redemption at the option of the issuer at a price established in the convertible security's governing instrument. If a convertible security held by a series is called for redemption, the series may be required to permit the issuer to redeem the security, convert it into the underlying common stock or sell it to a third party. CORPORATE ASSET-BACKED SECURITIES Corporate asset-backed securities, issued by trusts and special purpose corporations, are backed by a pool of assets, such as credit card and automobile loan receivables, representing the obligations of a number of different parties. These securities present certain risks. For instance, in the case of credit card receivables, these securities may not have the benefit of any security interest in the related collateral. Credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. Most issuers of automobile receivables permit the servicers to retain possession of the underlying obligations. If the servicer were to sell these obligations to another party, there is a risk that the purchaser would acquire an interest superior to that of the holders of the related automobile receivables. In addition, because of the large number of vehicles involved in a typical issuance and technical requirements under state laws, the trustee for the holders of the automobile receivables may not have a proper security interest in all of the obligations backing such receivables. Therefore, there is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities. The underlying assets (e.g., loans) are also subject to prepayments which shorten the securities weighted average life and may lower their return. Corporate asset-backed securities are backed by a pool of assets representing the obligations of a number of different parties. To lessen the effect of failures by obligors on underlying assets to make payments, the securities may contain elements of credit support which fall into two categories: (i) liquidity protection and (ii) protection against losses resulting from ultimate default by an obligor on the underlying assets. Liquidity protection refers to the provision of advances, generally by the entity administering the pool of assets, to ensure that the receipt of payments on the underlying pool occurs in a timely fashion. Protection against losses resulting from ultimate default ensures payment through insurance policies or letters of credit obtained by the issuer or sponsor from third parties. The series will not pay any additional or separate fees for credit support. The degree of credit support provided for each issue is generally based on historical information respecting the level of credit risk associated with the underlying assets. Delinquency or loss in excess of that anticipated or failure of the credit support could adversely affect the return on an investment in such a security. CORPORATE SECURITIES The series may invest in debt securities, such as convertible and non-convertible bonds, notes and debentures, issued by corporations, limited partnerships and other similar entities. DEBT SECURITIES The value of a series' investments in debt securities will change as interest rates fluctuate. When interest rates decline, the values of such securities generally can be expected to increase, and when interest rates rise, the values of such securities generally can be expected to decrease. The lower-rated and comparable unrated debt securities described above are subject to greater risks of loss of income and principal than are higher-rated fixed income securities. The market value of lower-rated 3 securities generally tends to reflect the market's perception of the creditworthiness of the issuer and short-term market developments to a greater extent than is the case with more highly rated securities, which reflect primarily functions in general levels of interest rates. DEPOSITARY RECEIPTS Each series may hold foreign securities. Such investments may include American Depositary Receipts ("ADRs"), American Depositary Shares ("ADSs"), Global Depositary Receipts ("GDRs") and European Depositary Receipts ("EDRs"). ADRs and ADSs typically are issued by an American bank or trust company and evidence ownership of underlying securities issued by a foreign corporation. EDRs, which are sometimes referred to as Continental Depositary Receipts ("CDRs"), are issued in Europe typically by foreign banks and trust companies and evidence ownership of either foreign or domestic securities. GDRs are similar to EDRs and are designed for use in several international financial markets. Generally, ADRs and ADSs in registered form are designed for use in United States securities markets and EDRs in bearer form are designed for use in European securities markets. For purposes of a series' investment policies, its investments in ADRs, ADSs, GDRs and EDRs will be deemed to be investments in the underlying foreign equity securities. ADR facilities may be established as either "unsponsored" or "sponsored." While ADRs issued under these two types of facilities are in some respects similar, there are distinctions between them relating to the rights and obligations of ADR holders and the practices of market participants. A depository may establish an unsponsored facility without participation by (or even necessarily the acquiescence of) the issuer of the deposited securities, although typically the depository requests a letter of non-objection from such issuer prior to the establishment of the facility. Holders of unsponsored ADRs generally bear all the costs of such facilities. The depository usually charges fees upon the deposit and withdrawal of the deposited securities, the conversion of dividends into U.S. dollars, the disposition of non-cash distributions and the performance of other services. The depository of an unsponsored facility frequently is under no obligation to distribute shareholder communications received from the issuer of the deposited securities or to pass through voting rights to ADR holders with respect to the deposited securities. Sponsored ADR facilities are created in generally the same manner as unsponsored facilities, except that the issuer of the deposited securities enters into a deposit agreement with the depository. The deposit agreement sets out the rights and responsibilities of the issuer, the depository and the ADR holders. With sponsored facilities, the issuer of the deposited securities generally will bear some of the costs relating to the facility (such as dividend payment fees of the depository), although ADR holders continue to bear certain other costs (such as deposit and withdrawal fees). Under the terms of most sponsored arrangements, depositories agree to distribute notices of shareholder meetings and voting instructions, and to provide shareholder communications and other information to the ADR holders at the request of the issuer of the deposited securities. The series may invest in both sponsored and unsponsored ADRs. Broker/dealers have recently launched another form of depositary receipt which represents an ownership interest in a pro rata portion of a portfolio of debt securities, which may, or may not, include foreign securities. The issuer may be a custodial receipt account held for the benefit of receipt purchasers or a trust. The custodian/ trust passes principal and interest payments received on the underlying portfolio to the receipt holders and also distributes corporate action notices as well. Receipt holders generally pay an annual administrative/trustee fee and may pay a redemption fee. In addition to risks associated with the underlying portfolio of securities, receipt holders also must consider credit standings of the custodians and broker/dealer sponsors. The receipts are not registered with the SEC and qualify as 144A securities which may make them more difficult and costly to sell. DOLLAR DENOMINATED FOREIGN DEBT SECURITIES Investing in dollar-denominated foreign debt represents a greater degree of risk than investing in domestic securities, due to less publicly available information, less securities regulation, war or expropriation. Special considerations may include higher brokerage costs and thinner trading markets. Investments in foreign countries could be affected by other factors including extended settlement periods. EMERGING MARKET SECURITIES "Emerging Markets" are those countries or regions with relatively low gross national product per capita compared to the world's major economies, and those countries or regions with the potential for rapid economic growth (emerging markets). Emerging markets in Asia will include countries: (i) having an "emerging stock market" as defined by the International Finance Corporation; (ii) with low-to middle-income economies according to the International Bank for Reconstruction and Development (the "World Bank"); (iii) listed in World Bank publications as developing; or (iv) determined by the advisor to be an emerging market as defined above. The series may invest in securities of: (i) companies where the principal securities trading market is an emerging market country; (ii) companies organized under the laws of, and with a principal office in, an emerging market country; or (iii) companies whose principal activities are located in emerging market countries. The risks of investing in foreign securities may be intensified in the case of investments in emerging markets. Securities of many issuers in emerging markets may be less liquid and more volatile than securities of comparable domestic issuers. Emerging markets also have different clearance and settlement procedures, and in certain 4 markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Delays in settlement could result in temporary periods when a portion of the assets of the series is uninvested and no return is earned thereon. The inability of the series to make intended security purchases due to settlement problems could cause the series to miss attractive investment opportunities. Inability to dispose of portfolio securities due to settlement problems could result either in losses to the series due to subsequent declines in value of the portfolio securities or, if the series has entered into a contract to sell the security, in possible liability to the purchaser. Securities prices in emerging markets can be significantly more volatile than in the more developed nations of the world, reflecting the greater uncertainties of investing in less established markets and economies. In particular, countries with emerging markets may have relatively unstable governments, present the risk of nationalization of businesses, restrictions on foreign ownership or prohibitions of repatriation of assets, and may have less protection of property rights than more developed countries. The economies of countries with emerging markets may be predominantly based on only a few industries, may be highly vulnerable to changes in local or global trade conditions, and may suffer from extreme and volatile debt burdens or inflation rates. Local securities markets may trade a small number of securities and may be unable to respond effectively to increases in trading volume, potentially making prompt liquidation of substantial holdings difficult or impossible at times. Securities of issuers located in countries with emerging markets may have limited marketability and may be subject to more abrupt or erratic price movements. Certain emerging markets may require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, if deterioration occurs in an emerging market's balance of payments or for other reasons, a country could impose temporary restrictions on foreign capital remittances. The series could be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation of capital, as well as by the application to the series of any restrictions on investments. Investments in certain foreign emerging market debt obligations may be restricted or controlled to varying degrees. These restrictions or controls may at times preclude investment in certain foreign emerging market debt obligations and increase the expenses of the series. EQUITY LINKED DERIVATIVES The series may invest in equity-linked derivative products designed to replicate the composition and performance of particular indices. Examples of such products include S&P Depositary Receipts ("SPDRs"), World Equity Benchmark Series ("WEBs"), NASDAQ 100 tracking shares ("QQQs"), Dow Jones Industrial Average Instruments ("DIAMONDS") and Optimized Portfolios as Listed Securities ("OPALS"). Investments in equity-linked derivatives involve the same risks associated with a direct investment in the types of securities included in the indices such products are designed to track. There can be no assurance that the trading price of the equity-linked derivatives will equal the underlying value of the basket of securities purchased to replicate a particular index or that such basket will replicate the index. Investments in equity-linked derivatives may constitute investments in other investment companies. EQUITY SECURITIES Equity securities include common stocks, preferred stocks and preference stocks; securities such as bonds, warrants or rights that are convertible into stocks; and depositary receipts for those securities. These securities may be listed on securities exchanges, traded in various over-the-counter markets or have no organized market. Investments in equity securities in general are subject to market risks that may cause their prices to fluctuate over time. The value of convertible equity securities is also affected by prevailing interest rates, the credit quality of the issuer and any call provisions. Fluctuations in the value of equity securities in which a series invests will cause the net asset value of the series to fluctuate. FINANCIAL FUTURES AND RELATED OPTIONS The series may enter into futures contracts on financial instruments ("financial futures") for the purchase or sale of debt obligations which are traded on recognized exchanges or boards of trade that are licensed and regulated by the Commodity Futures Trading Commission, and may purchase or sell options on financial futures contracts. Financial futures contracts consist of interest rate futures contracts, foreign currency futures contracts and securities index futures contracts. An interest rate futures contract obligates the seller of the contract to deliver, and the purchaser to take delivery of, the interest rate securities called for in the contract at a specified future time and at a specified price. A foreign currency futures contract obligates the seller of the contract to deliver, and the purchaser to take delivery of, the foreign currency called for in the contract at a specified future time and at a specified price. A securities index assigns relative values to the securities included in the index, and the index fluctuates with changes in the market values of the securities so included. A securities index futures contract is a bilateral agreement pursuant to which 2 parties agree to take or make delivery of an amount of cash equal to a specified dollar amount times the difference between the index value at the close of the last trading day of the contract and the price at which the futures contract is originally struck. An option on a financial futures contract gives the purchaser the right to assume a position in the contract (a long position if the option is a call and a short 5 position if the option is a put) at a specified exercise price at any time during the period of the option. A public market presently exists in interest rate futures contracts covering long-term U.S. Treasury bonds, U.S. Treasury notes, 3-month U.S. Treasury bills and GNMA certificates. Securities index futures contracts are currently traded with respect to the S&P 500 and other securities indices. A clearing corporation associated with a board of trade on which a financial futures contract trades assumes responsibility for the completion of transactions and guarantees that open futures contracts will be performed. A futures contract on a debt obligation is a binding contractual commitment which, if held to maturity, will result in an obligation to make or accept delivery, during a particular month, of obligations having a standard face value and rate of return. By entering into a futures contract for the purchase of a debt obligation, a series will legally obligate itself to accept delivery of the underlying security and pay the agreed price. Futures contracts are valued at the most recent settlement price, unless such price does not reflect the fair value of the contract, in which case such positions will be valued by or under the direction of the Board of Trustees of the Fund. Positions taken in the futures markets are not normally held to maturity, but are instead liquidated through offsetting transactions which may result in a profit or loss. While futures positions taken by a series usually would be liquidated in this manner, it may instead make or take delivery of the underlying securities whenever it appears economically advantageous for it to do so. In contrast to the situation when series purchase or sell a security, no security is delivered or received by the series upon the purchase or sale of a financial futures contract. Initially, a series will be required to deposit in a segregated account with its custodian bank an amount of cash, U.S. Treasury bills or liquid high-grade debt obligations. This amount is known as initial margin and is in the nature of a performance bond or good faith deposit on the contract. The current initial deposit required per contract is approximately 5% of the contract amount. Brokers may establish deposit requirements higher than this minimum. Subsequent payments called variation margin, will be made to and from the account on a daily basis as the price of the futures contract fluctuates. This process is known as marking to market. The writer of an option on a futures contract is required to deposit margin pursuant to requirements similar to those applicable to futures contracts. Upon exercise of an option on a futures contract, the delivery of the futures position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writer's margin account. In the case of a call, this amount will be equal to the amount by which the market price of the futures contract at the time of exercise exceeds, or, in the case of a put, is less than the exercise price of the option on the futures contract. For more information regarding options, see below. Although financial futures contracts by their terms call for actual delivery or acceptance of securities, in most cases the contracts are closed out before the settlement date without the making or taking of delivery. Closing out is accomplished by effecting an offsetting transaction. Effecting a futures contract purchase for the same aggregate amount of securities and the same delivery date closes out a futures contract sale. If the sale price exceeds the offsetting purchase price, the seller immediately would be paid the difference and would realize a gain. If the offsetting purchase price exceeds the sale price, the seller immediately would pay the difference and would realize a loss. Similarly, effecting a futures contract sale for the same securities and the same delivery date closes out a futures contract purchase. If the offsetting sale price exceeds the purchase price, the purchaser would realize a gain, whereas if the purchase price exceeds the offsetting sale price, the purchaser would realize a loss. A series may enter into financial futures contracts and related options as a hedge against anticipated changes in the market value of its portfolio securities or securities denominated in a foreign currency. Hedging is the initiation of an offsetting position in the futures market which is intended to minimize the risk associated with a position's underlying securities in the cash market. Hedging is accomplished when an investor takes a position in the futures market opposite to his cash market position. There are 2 types of hedges -- long (or buying) and short (or selling) hedges. Historically, prices in the futures market have tended to move in concert with cash market prices, and prices in the futures market have maintained a fairly predictable relationship to prices in the cash market. Thus, to a considerable extent, a decline in the market value of securities in a series' portfolio may be protected against by gains realized on futures contracts sales. Similarly, it is possible to protect against an increase in the market price of securities that a series may wish to buy in the future by purchasing futures contracts. The purpose of hedging in debt obligations is to establish more certainty than otherwise would be possible in the effective rate of return on portfolio securities. A series might, for example, take a "short" position in the futures markets by entering into contracts for the future delivery of securities held by it in order to hedge against an anticipated rise in interest rates that would adversely affect the value of such securities. When hedging of this type is successful, any depreciation in the value of securities will be substantially offset by appreciation in the value of the futures position. On the other hand, a series might take a "long" position by entering into contracts for the future purchase of securities. This could be done when the series anticipates the future purchase of particular debt securities but expects the rate of return then available in the securities market to be less favorable than rates that are currently available in the futures markets. 6 Except for the Phoenix-Van Kampen Focus Equity, Phoenix-Deutsche Dow 30, and Phoenix-Deutsche Nasdaq-100 Index(R) Series, transactions in financial futures contracts and related options will be primarily for hedging purposes. In addition, each series will not purchase or sell any financial futures contract or related option for non-bona fide hedging purposes if, immediately thereafter, the sum of the cash or U.S. Treasury bills committed with respect to its existing futures and related options positions and the premiums paid for related options would exceed 5% of the market value of its total assets. At the time of the purchase of a futures contract or a call option on a futures contract, any asset -- either including equity securities and non-investment grade debt so long as the asset is liquid, unencumbered and marked to market daily equal to the market value of the futures contract, minus the initial margin deposit with respect thereto -- will be deposited in a segregated account with the Fund's custodian bank to collateralize fully the position and thereby ensure that it is not leveraged. The extent to which the series may enter into financial futures contracts and related options also may be limited by requirements of the Internal Revenue Code of 1986 (the "Code") for qualification as a regulated investment company. A series will incur brokerage fees in connection with its financial futures transactions, and will be required to deposit and maintain funds with its custodian in its own name as margin to guarantee performance of its future obligations. These commissions may be higher than those that would apply to purchases and sales of securities directly. While financial futures would be traded to reduce certain risks, futures trading itself entails certain other risks. One risk arises because of the imperfect correlation between movements in the price of the futures contracts and movements in the price of the debt securities that are the subject of such contracts. In addition, the market price of futures contracts may be affected by certain factors, such as the closing out of futures contracts by investors through offsetting transactions, margin, deposit and maintenance requirements, and the participation of speculators in the futures market. Another risk is that there may not be a liquid secondary market on an exchange or board of trade for a given futures contract or at a given time, and in such event it may not be possible for the series to close a futures position. Finally, successful use of futures contracts by a series is subject, where applicable, to the advisor's or subadvisor's ability to correctly predict movements in the direction of interest rates and other factors affecting the market for debt securities. Thus, while a series may benefit from the use of such contracts, the operation of these risk factors may result in a poorer overall performance for the series than if it had not entered into any futures contract. The risk in purchasing an option on a financial futures contract is that the series will lose the premium it paid. Also, there may be circumstances when the purchase of an option on a financial futures contract would result in a loss to the series while the purchase or sale of the contract would not have resulted in a loss. A series is required to maintain, at all times, an asset coverage of at least 300% for all of its borrowings, which include obligations under any financial futures contract on a debt obligation or reverse repurchase agreement. In addition, immediately after entering into a futures contract for the receipt or delivery of a security, the value of the securities called for by all of the series' futures contracts (both for receipts and delivery) will not exceed 10% of its total assets. FIXED INCOME SECURITIES Fixed income securities are debt obligations issued by corporations, municipalities and other borrowers. The market value of a series fixed income investments will change in response to interest rate changes and other factors. During periods of falling interest rates, the values of outstanding fixed income securities generally rise. Conversely, during periods of rising interest rates, the values of such securities generally decline. Securities with longer maturities are subject to greater fluctuations in value than securities with shorter maturities. Fixed income securities rated in the fourth highest rating category lack outstanding investment characteristics, and have speculative characteristics as well. Changes by a nationally recognized statistical rating organization in the rating of a fixed income security and in the ability of an issuer to make payments of interest and principal also affect the value of these investments. Changes in the value of a series' securities will not affect cash income derived from these securities but will affect the series' net asset value. FOREIGN CURRENCY TRANSACTIONS For each series investing in foreign securities, the value of the assets of such series as measured in United States dollars may be affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations, and a series may incur costs in connection with conversions between various currencies. A series will conduct its foreign currency exchange transactions either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market, or through forward contracts to purchase or sell foreign currencies. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded directly between currency traders (usually large commercial banks) and their customers. Unless the series already owns a security denominated in (or otherwise exposed to) the foreign currency in the same amount as the forward contract, at the time of the purchase of a forward foreign currency exchange contract, any asset, including equity securities and non-investment grade debt so long as the asset is liquid, unencumbered and marked to market daily equal to the market value of 7 the contract, minus the series' initial margin deposit with respect thereto, will be deposited in a segregated account with the Fund's custodian bank to collateralize fully the position and thereby ensure that it is not leveraged. When a series enters into a contract for the purchase or sale of a security denominated in or exposed to a foreign currency, it may want to establish the United States dollar cost or proceeds. By entering into a forward contract in United States dollars for the purchase or sale of the amount of foreign currency involved in the underlying security transaction, a series may be able to protect itself against a possible loss between trade and settlement dates resulting from an adverse change in the relationship between the United States dollar and such foreign currency. However, this tends to limit potential gains that might result from a positive change in such currency relationships. When the advisor or subadvisor believes that the currency of a particular foreign country may suffer a substantial decline against the United States dollar, it may enter into a forward contract to sell an amount of foreign currency approximating the value of some or all of a series' portfolio securities denominated in or exposed to such foreign currency. The forecasting of short-term currency market movement is extremely difficult and whether such a short-term hedging strategy will be successful is highly uncertain. It is impossible to forecast with precision the market value of portfolio securities at the expiration of a contract. Accordingly, it may be necessary for a series to purchase additional currency on the spot market (and bear the expense of such purchase) if the market value of the security is less than the amount of foreign currency the series is obligated to deliver when a decision is made to sell the security and make delivery of the foreign currency in settlement of a forward contract. Conversely, it may be necessary to sell on the spot market some of the foreign currency received upon the sale of the portfolio security if its market value exceeds the amount of foreign currency the series is obligated to deliver. If the series retains the portfolio security and engages in an offsetting transaction, it will incur a gain or a loss to the extent that there has been movement in forward contract prices. If the series engages in an offsetting transaction, it may subsequently enter into a new forward contract to sell the foreign currency. Should forward prices decline during the period between the series' entering into a forward contract for the sale of a foreign currency and the date it enters into an offsetting contract for the purchase of the foreign currency, the series would realize gain to the extent the price of the currency it has agreed to sell exceeds the price of the currency it has agreed to purchase. Should forward prices increase, the series would suffer a loss to the extent the price of the currency it has agreed to purchase exceeds the price of the currency it has agreed to sell. Although such contracts tend to minimize the risk of loss due to a decline in the value of the hedged currency, they also tend to limit any potential gain which might result should the value of such currency increase. The series will have to convert holdings of foreign currencies into United States dollars from time to time. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference (the "spread") between the prices at which they are buying and selling various currencies. FOREIGN SECURITIES Each series may invest up to 25% of its total net asset value in foreign securities unless otherwise stated in the chart below. These limitations on investing in foreign securities do not necessarily reflect the actual percentage of total net asset value in foreign securities by the series. - ----------------------------------------------------------- SERIES % LIMITS - ----------------------------------------------------------- Phoenix-Aberdeen International 100% - ----------------------------------------------------------- Phoenix-Aberdeen New Asia 100% - ----------------------------------------------------------- Phoenix-Alliance/Bernstein Growth + Value 15% - ----------------------------------------------------------- Phoenix-Engemann Small & Mid-Cap Growth 50% - ----------------------------------------------------------- Phoenix-Hollister Value Equity 30% - ----------------------------------------------------------- Phoenix-Janus Flexible Income 100% - ----------------------------------------------------------- Phoenix-Janus Growth 100% - ----------------------------------------------------------- Phoenix-Lazard International Equity Select 100% - ----------------------------------------------------------- Phoenix-Lord Abbett Bond-Debenture 20%* - ----------------------------------------------------------- Phoenix-Lord Abbett Large-Cap Value 10%* - ----------------------------------------------------------- Phoenix-Lord Abbett Mid-Cap Value 10%* - ----------------------------------------------------------- Phoenix-MFS Investors Growth 35% - ----------------------------------------------------------- Phoenix-MFS Investors Trust 20% - ----------------------------------------------------------- Phoenix-MFS Value 35% - ----------------------------------------------------------- Phoenix-Oakhurst Growth and Income 20% - ----------------------------------------------------------- Phoenix-Sanford Bernstein Global Value 100% - ----------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value 20% - ----------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth 20% - ----------------------------------------------------------- Phoenix-Seneca Strategic Theme 35% - ----------------------------------------------------------- Phoenix-State Street Research Small-Cap 35% Growth - ----------------------------------------------------------- *The subadvisor for these series does not consider ADRs and securities of companies domiciled outside the U.S., but whose principal trading market is in the U.S. to be "foreign securities." This may have the indirect effect of increasing the series' exposure to these types of securities. The Phoenix-Goodwin Multi-Sector Fixed Income Series may invest up to 50% of total net asset value in foreign debt securities. Each series, other than those listed in the table above, will purchase foreign debt securities only if issued in U.S. dollar denominations. The Phoenix-J.P. Morgan Research Enhanced Index Series may invest in securities of foreign corporations, provided that such securities are included in the S&P 500 or traded on a U.S. exchange. 8 The series will invest in government obligations supported by the authority to levy taxes sufficient to ensure the payment of all principal and interest due on such obligations. Because foreign government obligations, like U.S. government obligations, are generally guaranteed for principal and interest by the government issuing the security, the principal risk of investing in foreign government obligations is that the foreign government will not or will be unable to meet its obligations. The series also may purchase securities of nongovernmental issuers considered creditworthy by the advisor or subadvisor, as applicable. For the series that may purchase foreign debt securities denominated in foreign currencies ("non-U.S. dollar securities"), the amount invested in such non-U.S. dollar securities may vary depending on the relative yield of such securities, the relative strength of the economies and the financial markets of such countries, the relative interest rates available in such countries and the relationship of such countries' currencies to the U.S. dollar. Investments in non-U.S. dollar securities and currency will be evaluated on the basis of fundamental economic criteria (e.g., relative inflation levels and trends, growth rate forecasts, balance of payments status, and economic policies) as well as technical and political data. As a result of its investments in foreign securities, the series may receive interest or dividend payments, or the proceeds of the sale or redemption of such securities, in the foreign currencies in which such securities are denominated. In that event, the series may convert such currencies into dollars at the then current exchange rate. Under certain circumstances, however, such as where the advisor believes that the applicable rate is unfavorable at the time the currencies are received or the advisor anticipates, for any other reason, that the NYSE rate will improve, the series may hold such currencies for an indefinite period of time. In addition, the series may be required to receive delivery of the foreign currency underlying forward foreign currency contracts into which it has entered. This could occur, for example, if an option written by the Fund is exercised or the Fund is unable to close out a forward contract. The series may hold foreign currency in anticipation of purchasing foreign securities. The series also may elect to take delivery of the currencies underlying options or forward contracts if, in the judgment of the advisor, it is in the best interest of the series to do so. In such instances as well, the series may convert the foreign currencies to dollars at the then current exchange rate, or may hold such currencies for an indefinite period of time. INDEXED SECURITIES The series may purchase securities with principal and/or interest payments whose prices are indexed to the prices of other securities, securities indices, currencies, precious metals or other commodities, or other financial indicators. Indexed securities typically, but not always, are debt securities or deposits whose value at maturity or coupon rate is determined by reference to a specific instrument or statistic. The series may also purchase indexed deposits with similar characteristics. Gold-indexed securities, for example, typically provide for a maturity value that depends on the price of gold, resulting in a security whose price tends to rise and fall together with gold prices. Currency-indexed securities typically are short-term to intermediate-term debt securities whose maturity values or interest rates are determined by reference to the values of one or more specified foreign currencies, and may offer higher yields than U.S. dollar denominated securities of equivalent issuers. Currency-indexed securities may be positively or negatively indexed; that is, their maturity value may increase when the specified currency value increases, resulting in a security that performs similarly to a foreign-denominated instrument, or their maturity value may decline when foreign currencies increase, resulting in a security whose price characteristics are similar to a put on the underlying currency. Currency-indexed securities may also have prices that depend on the values of a number of different foreign currencies relative to each other. Certain indexed securities may expose the series to the risk of loss of all or a portion of the principal amount of its investment and/or the interest that might otherwise have been earned on the amount invested. The performance of indexed securities depends to a great extent on the performance of the security, currency or other instrument to which they are indexed, and may also be influenced by interest rate changes in the U.S. and abroad. At the same time, indexed securities are subject to the credit risks associated with the issuer of the security, and their values may decline substantially if the issuer's creditworthiness deteriorates. Recent issuers of indexed securities have included banks, corporations and certain U.S. Government-sponsored entities. INVERSE FLOATING RATE OBLIGATIONS The series may invest in so-called "inverse floating rate obligations" or "residual interest bonds" or other obligations or certificates relating thereto structured to have similar features. In creating such an obligation, a municipality issues a certain amount of debt and pays a fixed interest rate. Half of the debt is issued as variable rate short term obligations, the interest rate of which is reset at short intervals, typically 35 days. The other half of the debt is issued as inverse floating rate obligations, the interest rate of which is calculated based on the difference between a multiple of (approximately two times) the interest paid by the issuer and the interest paid on the short-term obligation. Under usual circumstances, the holder of the inverse floating rate obligation can generally purchase an equal principal amount of the short term obligation and link the two obligations in order to create 9 long-term fixed rate bonds. Because the interest rate on the inverse floating rate obligation is determined by subtracting the short-term rate from a fixed amount, the interest rate will decrease as the short-term rate increases and will increase as the short-term rate decreases. The magnitude of increases and decreases in the market value of inverse floating rate obligations may be approximately twice as large as the comparable change in the market value of an equal principal amount of long-term bonds which bear interest at the rate paid by the issuer and have similar credit quality, redemption and maturity provisions. INVESTMENTS IN OTHER INVESTMENT COMPANIES Investments in other investment companies may include open-end investment companies, closed-end investment companies and unit investment trusts. Under the Investment Company Act of 1940, a series may not own more than 3% of the outstanding voting stock of an investment company, invest more than 5% of its total assets in any one investment company, or invest more than 10% of its total assets in the securities of investment companies. In some instances, a series may invest in an investment company in excess of these limits; for instance, when a series invests collateral it receives from loaning its portfolio securities. As the shareholder of another investment company, the series will bear its pro rata portion of the other investment company's expenses, including advisory fees. Such expenses are in addition to the expenses a series pays in connection with its own operations. JUNK BONDS The chart below sets forth the series that are permitted to invest in junk bonds and the percentage of total net assets each series may invest in such securities. - --------------------------------------------------------- SERIES % LIMITS - --------------------------------------------------------- Phoenix-Aberdeen International 20% - --------------------------------------------------------- Phoenix-Engemann Small & Mid-Cap Growth 5% - --------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income 50% - --------------------------------------------------------- Phoenix-Janus Flexible Income 100% - --------------------------------------------------------- Phoenix-Janus Growth 35% - --------------------------------------------------------- Phoenix-Lord Abbett Bond-Debenture 80% - --------------------------------------------------------- Phoenix-MFS Value 20% - --------------------------------------------------------- Phoenix-Oakhurst Strategic Allocation 5% - --------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth 5% - --------------------------------------------------------- Phoenix-Van Kampen Focus Equity 5% - --------------------------------------------------------- Junk bonds are non-investment grade debt securities. The market prices of such lower-rated securities generally fluctuate in response to changes in interest rates and economic conditions more than those of higher-rated securities. Additionally, there is a greater possibility that an adverse change in the financial condition of an issuer, particularly a higher leveraged issuer, may affect its ability to make payments of income and principal and increase the expenses of the series seeking recovery from the issuer. Lower-rated securities may be thinly traded and less liquid than higher-rated securities and therefore harder to value and more susceptible to adverse publicity concerning the issuer. LENDING OF PORTFOLIO SECURITIES Subject to certain investment restrictions, a series may, from time to time, lend securities from its portfolio to brokers, dealers and financial institutions deemed creditworthy and receive, as collateral, cash or cash equivalents which at all times while the loan is outstanding will be maintained in amounts equal to at least 100% (except the Phoenix-Aberdeen New Asia Series which will maintain an amount equal to at least 102%) of the current market value of the loaned securities. Any cash collateral will be invested in short-term securities that will increase the current income of the series lending its securities. A series will have the right to regain record ownership of loaned securities to exercise beneficial rights such as voting rights and subscription rights. While a securities loan is outstanding, the series is to receive an amount equal to any dividends, interest or other distributions with respect to the loaned securities. A series may pay reasonable fees to persons unaffiliated with the Fund for services in arranging such loans. Even though securities lending usually does not impose market risks on the lending series, a series would be subject to risk of loss due to an increase in value if the borrower fails to return the borrowed securities for any reason (such as the borrower's insolvency). Moreover, if the borrower of the securities is insolvent, under current bankruptcy law, a series could be ordered by a court not to liquidate the collateral for an indeterminate period of time. If the borrower is the subject of insolvency proceedings and the collateral held might not be liquidated, the result could be a material adverse impact on the liquidity of the lending series. LEVERAGE The Phoenix-AIM Mid-Cap Equity, Phoenix-Alliance/Bernstein Growth + Value, Phoenix-Hollister Value Equity, Phoenix-J.P. Morgan Research Enhanced Index, Phoenix-Lazard International Equity Select, Phoenix-Lazard Small-Cap Value, Phoenix-Lazard U.S. Multi-Cap, Phoenix-Seneca Mid-Cap Growth, Phoenix-Seneca Strategic Theme and Phoenix-Van Kampen Focus Equity Series may, from time to time, increase their ownership of securities holdings above the amounts otherwise possible by borrowing from banks at fixed amounts of interests and investing the borrowed funds. The series will borrow only from banks, and only if immediately after such borrowing the value of the assets of the series (including the amount borrowed), less its liabilities (not including any borrowings) is at least 3 times the amount of funds borrowed for investment purposes. The series, other than the Phoenix-Hollister Value Equity, Phoenix-Lazard International Equity Select, Phoenix-Lazard Small-Cap Value, Phoenix-Lazard U.S. Multi-Cap and the Phoenix-Van Kampen Focus Equity Series may borrow up to 25% of the net assets of such 10 series, not including the proceeds of any such borrowings. The Phoenix-AIM Mid-Cap Equity, Phoenix-Lazard International Equity Select, Phoenix-Lazard Small-Cap Value, Phoenix-Lazard U.S. Multi-Cap and Phoenix-Van Kampen Focus Equity Series may borrow up to 33-1/3% of its total assets (including the amount borrowed) less liabilities. However, the amount of the borrowings will be dependent upon the availability and cost of credit from time to time. If, due to market fluctuations or other reasons, the value of such series' assets computed as provided above become less than three times the amount of the borrowings for investment purposes, the series, within three business days, is required to reduce bank debt to the extent necessary to meet the required 300% asset coverage The Phoenix-Hollister Value Equity Series may borrow up to one-third of the its net assets. If the value of such series' assets decreases and the amount of the loans exceed one-third of the series' net assets, the series must reduce its outstanding loans within three business days so that the amount of the loan does not exceed one-third of the series' net assets. The Phoenix-Oakhurst Growth and Income, Phoenix-Sanford Bernstein Global Value, and Phoenix-Sanford Bernstein Mid-Cap Value Series may not borrow except for emergency or other extraordinary purposes, only from a bank, and only in an amount not to exceed 5% of the series' total assets (33-1/3% in the case of Phoenix-Oakhurst Growth and Income Series). These series must also maintain a 300% asset coverage ratio. Phoenix-Sanford Bernstein Mid-Cap Value Series may collateralize any such borrowings with up to 10% of its total assets; Phoenix-Oakhurst Growth and Income and Phoenix-Sanford Bernstein Global Value Series may collateralize any such borrowing with up to 33-1/3% of its total assets. Interest on money borrowed will be an expense of those series with respect to which the borrowing has been made. Because such expense otherwise would not be incurred, the net investment income of such series is not expected to be as high as it otherwise would be during periods when borrowings for investment purposes are substantial. Bank borrowings for investment purposes must be obtained on an unsecured basis. Any such borrowing also must be made subject to an agreement by the lender that any recourse is limited to the assets of such series with respect to which the borrowing has been made. Any investment gains made with the additional monies borrowed in excess of interest paid will cause the net assets value of such series shares to rise faster than otherwise would be the case. On the other hand, if the investment performance of the additional securities purchased fails to cover its cost (including any interest paid on the monies borrowed) to such series, the net asset value of the series will decrease faster than otherwise would be the case. LOANS AND OTHER DIRECT INDEBTEDNESS The series may purchase loans and other direct indebtedness. In purchasing a loan, the series acquires some or all of the interest of a bank or other lending institution in a loan to a corporate, governmental or other borrower. Many such loans are secured, although some may be unsecured. Such loans may be in default at the time of purchase. Loans that are fully secured offer the series more protection than an unsecured loan in the event of non-payment of scheduled interest or principal. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the corporate borrowers obligation, or that the collateral can be liquidated. These loans are made generally to finance internal growth, mergers, acquisitions, stock repurchases, leveraged buy-outs and other corporate activities. Such loans are typically made by a syndicate of lending institutions, represented by an agent lending institution which has negotiated and structured the loan and is responsible for collecting interest, principal and other amounts due on its own behalf and on behalf of the others in the syndicate, and for enforcing its and their other rights against the borrower. Alternatively, such loans may be structured as a novation, pursuant to which the series would assume all of the rights of the lending institution in a loan or as an assignment, pursuant to which the series would purchase an assignment of a portion of a lenders interest in a loan either directly from the lender or through an intermediary. The series may also purchase trade or other claims against companies, which generally represent money owned by the company to a supplier of goods or services. These claims may also be purchased at a time when the company is in default. Certain of the loans and the other direct indebtedness acquired by the series may involve revolving credit facilities or other standby financing commitments which obligate the series to pay additional cash on a certain date or on demand. These commitments may have the effect of requiring the series to increase its investment in a company at a time when the series might not otherwise decide to do so (including at a time when the company's financial condition makes it unlikely that such amounts will be repaid). To the extent that the series is committed to advance additional funds, it will at all times hold and maintain in a segregated account cash or other high grade debt obligations in an amount sufficient to meet such commitments. The series' ability to receive payment of principal, interest and other amounts due in connection with these investments will depend primarily on the financial condition of the borrower. In selecting the loans and other direct indebtedness which the series will purchase, the adviser will rely upon its own (and not the original lending institution's) credit analysis of the borrower. As the series may be required to rely upon another lending institution to collect and pass onto the series amounts 11 payable with respect to the loan and to enforce the series' rights under the loan and other direct indebtedness, an insolvency, bankruptcy or reorganization of the lending institution may delay or prevent the series from receiving such amounts. In such cases, the series will evaluate as well the creditworthiness of the lending institution and will treat both the borrower and the lending institution as an "issuer" of the loan for purposes of certain investment restrictions pertaining to the diversification of the series' portfolio investments. The highly leveraged nature of many such loans and other direct indebtedness may make such loans and other direct indebtedness especially vulnerable to adverse changes in economic or market conditions. Investments in such loans and other direct indebtedness may involve additional risk to the series. MORTGAGE-BACKED SECURITIES Mortgage-backed securities include mortgage pass-through certificates, real estate mortgage investment conduit ("REMIC") certificates and collateralized mortgage obligations ("CMOs"). CMOs are hybrid instruments with characteristics of both mortgage-backed and mortgage pass-through securities. Similar to a bond, interest and prepaid principal on a CMO are paid, in most cases, semiannually. CMOs may be collateralized by whole mortgage loans but are more typically collateralized by portfolios of mortgage pass-through securities guaranteed by Government National Mortgage Association (GNMA), for Federal National Mortgage Association. CMOs are structured into multiple classes, with each class bearing a different stated maturity. Monthly payments of principal, including prepayments, are first returned to investors holding the shortest maturity class; investors holding the longer maturity classes receive principal only after the first class has been retired. REMICs are similar to CMOs and are fixed pools of mortgages with multiple classes of interests held by investors. Mortgage pass-through securities are securities representing interests in "pools" of mortgage loans. Monthly payments of interest and principal by the individual borrowers on mortgages are passed through to the holders of the securities (net of fees paid to the issuer or guarantor of the securities) as the mortgages in the underlying mortgage pools are paid off. The average lives of mortgage pass-throughs are variable when issued because their average lives depend on prepayment rates. The average life of these securities is likely to be substantially shorter than their stated final maturity as a result of unscheduled principal prepayment. Prepayments on underlying mortgages result in a loss of anticipated interest, and all or part of a premium if any has been paid, and the actual yield (or total return) to the series may be different than the quoted yield on the securities. Mortgage premiums generally increase with falling interest rates and decrease with rising interest rates. Like other fixed income securities, when interest rates rise the value of mortgage pass-through security generally will decline; however, when interest rates are declining, the value of mortgage pass-through securities with prepayment features may not increase as much as that of other fixed-income securities. In the event of an increase in interest rates which results in a decline in mortgage prepayments, the anticipated maturity of mortgage pass-through securities held by the series may increase, effectively changing a security which was considered short or intermediate-term at the time of purchase into a long-term security. Long-term securities generally fluctuate more widely in response to changes in interest rates than short or intermediate-term securities. Payment of principal and interest on some mortgage pass-through securities (but not the market value of the securities themselves) may be guaranteed by the full faith and credit of the U.S. Government (in the case of securities guaranteed by the Government National Mortgage Association ("GNMA")); or guaranteed by agencies or instrumentalities of the U.S. Government (such as the Federal National Mortgage Association "FNMA") or the Federal Home Loan Mortgage Corporation, ("FHLMC") which are supported only by the discretionary authority of the U.S. Government to purchase the agency's obligations). Non-governmental issuers (such as commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers) may also issue mortgage pass-through securities. Various forms of insurance or guarantees may support some of these mortgage pass-through securities. Interests in pools of mortgage-related securities differ from other forms of debt securities, which normally provide for periodic payment of interest in fixed amounts with principal payments at maturity or specified call dates. Instead, these securities provide a monthly payment that consists of both interest and principal payments. In effect, these payments are a "pass-through" of the monthly payments made by the individual borrowers on their mortgage loans, net of any fees paid to the issuer or guarantor of such securities. Additional payments are caused by prepayments of principal resulting from the sale, refinancing or foreclosure of the underlying property, net of fees or costs that may be incurred. Some mortgage pass-through securities (such as securities issued by the GNMA) are described as "modified pass-through." These securities entitle the holder to receive all interests and principal payments owed on the mortgages in the mortgage pool, net of certain fees, at the scheduled payment dates regardless of whether the mortgagor actually makes the payment. The principal governmental guarantor of mortgage pass-through securities is GNMA. GNMA is a wholly owned U.S. Government corporation within the Department of Housing and Urban Development. GNMA is authorized to guarantee, with the full faith and credit of the U.S. Government, the timely payment of principal and interest on securities issued by institutions approved by GNMA (such as savings and loan institutions, 12 commercial banks and mortgage bankers) and backed by pools of Federal Housing Administration ("FHA") -- insured or Veterans Administration ("VA") -- guaranteed mortgages. These guarantees, however, do not apply to the market value or yield of mortgage pass-through securities. GNMA securities are often purchased at a premium over the maturity value of the underlying mortgages. This premium is not guaranteed and will be lost if prepayment occurs. Government-related guarantors (i.e., whose guarantees are not backed by the full faith and credit of the U.S. Government) include FNMA and FHLMC. FNMA is a government-sponsored corporation owned entirely by private stockholders. It is subject to general regulation by the Secretary of Housing and Urban Development. FNMA purchases conventional residential mortgages (i.e., mortgages not insured or guaranteed by any governmental agency) from a list of approved seller/servicers which include state and federally chartered savings and loan associations, mutual savings banks, commercial banks, credit unions and mortgage bankers. Pass-through securities issued by FNMA are guaranteed as to timely payment by FNMA of principal and interest. FHLMC is also a government-sponsored corporation owned by private stockholders. FHLMC issues Participation Certificates ("PCs") which represent interests in conventional mortgages (i.e., not federally insured or guaranteed) for FHLMC's national portfolio. FHLMC guarantees timely payment of interest and ultimate collection of principal regardless of the status of the underlying mortgage loans. Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers also create pass through pools of mortgage loans. Such issuers may also be the originators and/or servicers of the underlying mortgage-related securities. Pools created by such non-governmental issuers generally offer a higher rate of interest than government and government-related pools because there are no direct or indirect government or agency guarantees of payments in the former pools. However, timely payment of interest and principal of mortgage loans in these pools may be supported by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance and letters of credit. Governmental entities, private insurers and the mortgage poolers issue the insurance and guarantees. There can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The series may also buy mortgage-related securities without insurance or guarantees. A particular risk associated with pass-through securities involves the volatility of prices in response to changes in interest rates or prepayment risk. Prepayment rates are important because of their effect on the yield and price of securities. Prepayments occur when the holder of an individual mortgage prepays the remaining principal before the mortgages' scheduled maturity date. As a result of the pass-through of prepayments of principal on the underlying securities, mortgage-backed securities are often subject to more rapid prepayment of principal than their stated maturity would indicate. Although the pattern of repayments is estimated and reflected in the price paid for pass-through securities at the time of purchase, the actual prepayment behavior of mortgages cannot be known at that time. Therefore, it is not possible to predict accurately the realized yield or average life of a particular issue of pass-through securities. Prepayments that occur faster than estimated adversely affect yields for pass-throughs purchased at a premium (that is, a price in excess of principal amount) and may cause a loss of principal because the premium may not have been fully amortized at the time the obligation is repaid. The opposite is true for pass-throughs purchased at a discount. Furthermore, the proceeds from prepayments usually are reinvested at current market rates, which may be higher than, but usually are lower than, the rates earned on the original pass-through securities. Prepayments on a pool of mortgage loans are influenced by a variety of economic, geographic, social and other factors, including changes in mortgagors' housing needs, job transfers, unemployment, mortgagors' net equity in the mortgaged properties and servicing decisions. Generally, however, prepayments on fixed rate mortgage loans will increase during a period of falling interest rates and decrease during a period of rising interest rates. Mortgage-backed securities may decrease in value as a result of increases in interest rates and may benefit less than other fixed income securities or decline in value from declining interest rates because of risk of prepayment. Pass-through securities are forms of derivatives. MORTGAGE "DOLLAR-ROLL" TRANSACTIONS A series may enter into mortgage "dollar roll" transactions pursuant to which it sells mortgage-backed securities for delivery in the future and simultaneously contracts to repurchase substantially similar securities on a specified future date. During the roll period, the series foregoes principal and interest paid on the mortgage-backed securities. The series is compensated for the lost interest by the difference between the current sales price and the lower price for the future purchase (often referred to as the "drop") as well as by the interest earned on, and gains from, the investment of the cash proceeds of the initial sale. The series may also be compensated by receipt of a commitment fee. If the income and capital gains from the series' investment of the cash from the initial sale do not exceed the income, capital appreciation and gain or loss that would have been realized on the securities sold as part of the dollar roll, the use of this technique will diminish the investment performance of the series compared with what the performance would have been without the use of the dollar rolls. Dollar roll transactions involve the risk that the market value of the securities the series is required to purchase may decline below the 13 agreed upon repurchase price of those securities. If the broker/dealer to whom the series sells securities becomes insolvent, the series' right to purchase or repurchase securities may be restricted. Successful use of mortgage dollar rolls may depend upon the adviser's ability to correctly predict interest rates and prepayments. There is no assurance that dollar rolls can be successfully employed. OPTIONS Buying Call and Put Options. Each of the series may invest up to an aggregate of 5% of its total assets in exchange-traded or over-the-counter call and put options on securities, securities indices and foreign currencies. Purchases of such options may be made for the purpose of hedging against changes in the market value of the underlying securities or foreign currencies. The series may invest in call and put options whenever, in the opinion of the advisor or subadvisor, a hedging transaction is consistent with its investment objectives. The series may sell a call option or a put option that it has previously purchased prior to the purchase (in the case of a call) or the sale (in the case of a put) of the underlying security or foreign currency. Any such sale would result in a net gain or loss depending on whether the amount received on the sale is more or less than the premium and other transaction costs paid on the call or put which is sold. Purchasing a call or put option involves the risk that the series may lose the premium it paid plus transaction costs. The seller of an option receives a cash payment or premium at the time of sale, which is retained by the seller whether or not, the option is exercised. This premium represents consideration to the seller for undertaking the obligation under the option contract. In the case of call options, the premium compensates the seller for the loss of the opportunity to profit from any increase in the value of the security or the index. The premium to a seller of a put option compensates the seller for the risk assumed in connection with a decline in the value of the security or index. A call option on a security or a foreign currency gives the purchaser of the option, in return for the premium paid to the writer (seller), the right to buy the underlying security or foreign currency at the exercise price at any time during the option period. A put option on equity or debt securities gives the holder the right to sell such a security at a specified price (the exercise price) for a stated period of time. Prior to the expiration of the option, the seller of the option has an obligation to buy the underlying security from the holder of the option at the original price specified regardless of the market price of the security at the time the option is exercised. Call and put options on stock market indexes operate the same way as call and put options on equity or debt securities except that they are settled in cash. In effect, the holder of a call option on a stock market index has the right to buy the value represented by the index at a specified price and for a stated period of time. Conversely, the holder of a put option on a stock market index has the right to sell the value represented by the index for a specified price and for a stated period of time. To be settled in cash means that if the option is exercised, the difference in the current value of the stock market index and the exercise value must be paid in cash. For example, if a call option was bought on the XYZ stock market index with an exercise price of $100 (assuming the current value of the index is 110 points, with each point equal to $1.00), the holder of the call option could exercise the option and receive $10 (110 points minus 100 points) from the seller of the option. If the index equals 90 points, the holder of the option receives nothing. A series may close an open call or put option position by selling a call option, in the case of an open call position, or a put option, in the case of an open put option, which is the same as the option being closed. The series will receive a premium for selling such an option. The premium received may be more than, equal to or less than the premium paid by the series when it bought the option that is being closed. The premium paid by the series for the purchase of a call or a put option and the expiration or closing sale transaction with respect to such options are treated in a manner analogous to that described above, except there is no liability created to the series. The premium paid for any such option is included in assets and marked to the market value on a current basis. If the options expire, the series will realize a short-term loss on the amount of the cost of the option. If a purchased put or call option is closed out by the series entering into a closing sale transaction, the series will realize a short-term gain or loss, depending upon whether the sale proceeds from the closing sale transaction are greater or less than the cost of the put or call option. Writing (Selling) Call and Put Options. Prior to the expiration of the option, the seller of a call option has an obligation to sell the underlying security to the holder of the option at the original price specified regardless of the market price of the security at the time the option is exercised. The seller of the call option receives a cash payment (premium) at the time of sale, which premium is retained by the seller whether or not the option is exercised. The premium represents consideration to the seller for undertaking the obligations under the option contract and thereby foregoing the opportunity to profit from an increase in the market price of the underlying security above the exercise price (except insofar as the premium represents such a profit). Upon exercise by the purchaser, the writer of a call option has the obligation to sell the underlying security or foreign security, except that the value of the option depends on the weighted value of the group of securities comprising the index and all settlements are made in cash. 14 The writer (seller) may terminate a call option by entering into a closing purchase transaction in which it purchases an option of the same series as the option previously written. A put option on a security or foreign currency gives the purchaser of the option, in return for the premium paid to the writer (seller), the right to sell the underlying security or foreign currency at the exercise price at any time during the option period. Upon exercise by the purchaser, the writer of a put option has the obligation to purchase the underlying security or foreign currency at the exercise price. A put option on a securities index is similar to a put option on an individual security, except that the value of the options depends on the weighted value of the group of securities comprising the index and all settlements are made in cash. The series may write exchange-traded call options on their securities. Call options may be written on portfolio securities, securities indices and foreign currencies. The series may, with respect to securities and foreign currencies, write call and put options on an exchange or over the counter. Call options on portfolio securities will be covered since the series will own the underlying securities or other securities that are acceptable for escrow at all times during the option period. Call options on securities indices may be written to hedge in an economically appropriate way portfolio securities which are not otherwise hedged with options or financial futures contracts and will be "covered" by identifying the specific portfolio securities being hedged. Call options on foreign currencies and put options on securities and foreign currencies will be covered by securities acceptable for escrow. The series, other than the Phoenix-Van Kampen Focus Equity Series, may not write options on more than 50% of its total assets. Management presently intends to cease writing options if and as long as 25% of such total assets are subject to outstanding options contracts. The series will write call and put options in order to obtain a return on its investments from the premiums received and will retain the premiums whether or not the options are exercised. Any decline in the market value of portfolio securities or foreign currencies will be offset to the extent of the premiums received (net of transaction costs). If an option is exercised, the premium received on the option will effectively increase the exercise price or reduce the difference between the exercise price and market value. During the option period, the writer of a call option gives up the opportunity for appreciation in the market value of the underlying security or currency above the exercise price. It retains the risk of loss should the price of the underlying security or foreign currency decline. Writing call options also involves risks relating to the series' ability to close out options it has written. During the option period, the writer of a put option has assumed the risk that the price of the underlying security or foreign currency will decline below the exercise price. However, the writer of the put option has retained the opportunity for any appreciation above the exercise price should the market price of the underlying security or foreign currency increase. Writing put options also involves risks relating to a portfolio's ability to close out options it has written. Writing Covered Call Options. The series may write (sell) covered call options on securities owned by them, including securities into which convertible securities are convertible, provided that such call options are listed on a national securities exchange. When a series writes a covered call option, an amount equal to the premium received by it is included in assets of the series offset by an equivalent liability. The amount of the liability is subsequently marked to reflect the current market value of the written option. Market value is the last sale price of the options on the New York Stock Exchange ("NYSE") or other market on which it is traded or, in absence of a sale, the mean between last bid and offer prices. If an option which the series has written either ends or the series enters into a closing purchase transaction, the series realizes a gain (or loss if the cost of a closing purchase transaction exceeds the premium received when the option was sold) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option concludes. Premium income earned with respect to a qualified covered call option which lapses or experiences gain or loss from such an option which is closed out (other than by exercise) generally will be short-term capital gain or loss. Further, gain or loss with respect to the exercise of such an option generally will be short-term or long-term depending upon the actual or deemed holding period of the underlying security. However, any loss realized from writing a "qualified covered call option" which has a strike price less than the applicable security price (defined in Section 1092(C)(4)(G) of the Code) will be treated as a long-term capital loss, if gain from the sale of the underlying security at the time the loss is realized would be long-term capital gain. Also, with respect to such options, the holding period of the underlying security will not include any period during which the Fund has an outstanding written option. Purchasing Warrants and Stock Rights. Warrants and stock rights are almost identical to call options in their nature, use and effect except that they are issued by the issuer of the underlying security, rather than an option writer, and they generally have longer expiration dates than call options. Over-the-Counter ("OTC") Options. OTC options differ from exchange-traded options in several respects. They are transacted directly with dealers and not with a clearing corporation, and there is a risk of nonperformance by the dealer. However, the premium is paid in advance by the dealer. OTC options are available for a greater variety of 15 securities and foreign currencies and in a wider range of expiration dates and exercise prices than exchange-traded options. Since there is no exchange, pricing is normally done by reference to information from a market maker. This information is carefully monitored or caused to be monitored by the advisor or subadvisor and verified in appropriate cases. A writer or purchaser of a put or call option can terminate it voluntarily only by entering into a closing transaction. In the case of OTC options, there can be no assurance that a continuous liquid secondary market will exist for any particular option at any specific time. Consequently, a series may be able to realize the value of an OTC option it has purchased only by exercising it or entering into a closing sale transaction with the dealer that issued it. Similarly, when a series writes an OTC option, it generally can close out that option prior to its expiration only by entering into a closing purchase transaction with the dealer to which it originally wrote the option. If a covered call option writer cannot effect a closing transaction, it cannot sell the underlying security or foreign currency until the option expires or the option is exercised. Therefore, the writer of a covered OTC call option may not be able to sell an underlying security even though it otherwise might be advantageous to do so. Likewise, the writer of a secured OTC put option may be unable to sell the securities pledged to secure the put for other investment purposes while it is obligated as a put writer. Similarly, a purchaser of an OTC put or call option also might find it difficult to terminate its position on a timely basis in the absence of a secondary market. The Fund understands the position of the staff of the Securities and Exchange Commission ("SEC") to be that purchased OTC options and the assets used as "cover" for written OTC options are generally considered illiquid securities. Although the dealers with which a series will engage in OTC options transactions are generally agreeable to and capable of entering into closing transactions, the Fund has adopted procedures for engaging in OTC options transactions for the purpose of reducing any potential adverse effect of such transactions upon the liquidity of the series. A series will engage in OTC options transactions only with dealers that meet certain credit and other criteria established by the Board of Trustees of the Fund. The Fund and the advisor believe that the approved dealers present minimal credit risks to the Fund and, therefore, should be able to enter into closing transactions if necessary. A series currently will not engage in OTC options transactions if the amount invested by the series in OTC options, plus a "liquidity charge" related to OTC options written by the series in illiquid securities plus any other portfolio securities considered to be illiquid, would exceed 10% of the series' total assets (15% of the net assets of each of the Phoenix-Janus Flexible Income, Phoenix-Janus Growth and Phoenix-Van Kampen Focus Equity Series). The "liquidity charge" referred to above is computed as described below. The series anticipates entering into agreements with dealers to which the series sell OTC options. Under these agreements a series would have the absolute right to repurchase the OTC options from the dealer at any time at a price no greater than a price established under the agreements (the "Repurchase Price"). The "liquidity charge" referred to above for a specific OTC option transaction will be the Repurchase Price related to the OTC option less the intrinsic value of the OTC option. The intrinsic value of an OTC call option for such purposes will be the amount by which the current market value of the underlying security exceeds the exercise price. In the case of an OTC put option, intrinsic value will be the amount by which the exercise price exceeds the current market value of the underlying security. If there is no such agreement requiring a dealer to allow a series to repurchase a specific OTC option written by the series, the "liquidity charge" will be the current market value of the assets serving as "cover" for such OTC option. PIK BONDS PIK bonds are debt obligations that provide that the issuer may, at its option, pay interest on such bonds in cash or in the form of additional debt obligations. Such investments benefit the issuer by mitigating its need for cash to meet debt service, but also require a higher rate of return to attract investors who are willing to defer receipt of such cash. Such investments may experience greater volatility in market value than debt obligations that make regular payments of interest. The series will accrue income on such investments for tax and accounting purposes, which is distributable to shareholders and which, because no cash is received at the time of accrual, may require the liquidation of other portfolio securities to satisfy the series' distribution obligations. PRIVATE PLACEMENTS AND RULE 144A SECURITIES Each series may purchase securities, which have been privately issued and are subject to legal restrictions on resale or which are issued to qualified institutional investors under special rules adopted by the SEC. Such securities may offer higher yields than comparable publicly traded securities. Such securities ordinarily can be sold by the series in secondary market transactions to certain qualified investors pursuant to rules established by the SEC, in privately negotiated transactions to a limited number of purchasers or in a public offering made pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "1933 Act"). Public sales of such securities by a series may involve significant delays and expense. Private sales often require negotiation with one or more purchasers and may produce less favorable prices than the sale of similar unrestricted securities. Public sales generally involve the time and expense of the preparation and processing of a registration 16 statement under the 1933 Act (and the possible decline in value of the securities during such period) and may involve the payment of underwriting commissions. In some instances, the series may have to bear certain costs of registration in order to sell such shares publicly. Except in the case of securities sold to qualifying institutional investors under special rules adopted by the SEC for which the subadvisor, under procedures adopted by the Trustees, determine the secondary market is illiquid, Rule 144A Securities will be considered illiquid. Trustees may determine the secondary market is liquid based upon the following factors which will be reviewed periodically as required pursuant to procedures adopted by the series: the number of dealers willing to purchase or sell the security; the frequency of trades; dealer undertakings to make a market in the security; and the nature of the security and its market. Investing in Rule 144A Securities could have the effect of increasing the level of these series' illiquid securities to the extent that qualified institutional buyers become, for a time, uninterested in purchasing these securities. Each series, other than those listed below, may invest up to 15% of its net assets in illiquid securities. The Phoenix-Lord Abbett Bond-Debenture, may invest up to 10% of its net assets in illiquid securities. The Phoenix-Lord Abbett Large-Cap Value Series may invest up to 5% of its net assets in illiquid securities. PRIVATIZATIONS The governments of some foreign countries have been engaged in programs of selling part or all of their stakes in government owned or controlled enterprises ("privatizations"). Privatizations may offer opportunities for significant capital appreciation. In certain foreign countries, the ability of foreign entities to participate in privatizations may be limited by local law, or the terms on which a series may be permitted to participate may be less advantageous than those for local investors. There can be no assurance that foreign governments will continue to sell companies currently owned or controlled by them or that privatization programs will be successful. REAL ESTATE INVESTMENT TRUSTS REITs pool investors' funds for investment primarily in income-producing commercial real estate or real estate related loans. A REIT is not taxed on income distributed to shareholders if it complies with several requirements relating to its organization, ownership, assets and income and a requirement that it distribute to its shareholders at least 95% of its taxable income (other than net capital gains) for each taxable year. REITs generally can be classified as follows: [diamond] Equity REITs, which invest the majority of their assets directly in real property and derive their income primarily from rents. Equity REITs can also realize capital gains by selling properties that have appreciated in value. [diamond] Mortgage REITs, which invest the majority of their assets in real estate mortgages and derive their income primarily from interest payments. [diamond] Hybrid REITs, which combine the characteristics of both equity REITs and mortgage REITs. Selecting REITs requires an evaluation of the merits of each type of asset a particular REIT owns, as well as regional and local economics. Due to the proliferation of REITs in recent years and the relative lack of sophistication of certain REIT managers, the quality of REIT assets has varied significantly. In addition to these risks, equity REITs may be affected by changes in the value of the underlying properties owned by the trusts, while mortgage REITs may be affected by the quality of any credit extended. Further, equity and mortgage REITs are dependent upon management skills and generally are not diversified. Equity and mortgage REITs also are subject to potential defaults by borrowers, self-liquidation and the possibility of failing to qualify for tax-free status of income under the Code and failing to maintain exemption from the Investment Company Act of 1940. In the event of default by a borrower or lessee, the REIT may experience delays in enforcing its rights as a mortgagee or lessor and may incur substantial costs associated with protecting its investments. In addition, investment in REITs could cause the series to possibly fail to qualify as a regulated investment company. REITs are like closed-end investment companies in that they are essentially holding companies that rely on professional managers to supervise their investments. REPURCHASE AGREEMENTS Repurchase Agreements are agreements by which a series purchases a security and obtains a simultaneous commitment from the seller (a member bank of the Federal Reserve System or, to the extent permitted by the Investment Company Act of 1940, a recognized securities dealer) that the seller will repurchase the security at an agreed upon price and date. The resale price is in excess of the purchase price and reflects an agreed upon market rate unrelated to the coupon rate on the purchased security. In fact, such a transaction is a loan of money to the seller of the securities. A repurchase transaction is usually accomplished either by crediting the amount of securities purchased to the accounts of the custodian of the Fund maintained in a central depository or book-entry system or by physical delivery of the securities to the Fund's custodian in return for delivery of the purchase price to the seller. Repurchase transactions are intended to be short-term transactions with the seller repurchasing the securities, usually within 7 days. Even though repurchase transactions usually do not impose market risks on the purchasing series, if the seller of the repurchase agreement defaults and does not 17 repurchase the underlying securities, the series might incur a loss if the value of the underlying securities declines, and disposition costs may be incurred in connection with liquidating the underlying securities. In addition, if bankruptcy proceedings are commenced regarding the seller, realization upon the underlying securities may be delayed or limited, and a loss may be incurred if the underlying securities decline in value. Each series may invest in repurchase agreements. However, no more than 15% of a series' net assets will be invested in repurchase agreements having maturities of more than 7 days. Repurchase agreements will be entered into with commercial banks, brokers and dealers considered by the Board of Trustees and the advisor or subadvisor, as applicable, acting at the Board's direction, to be creditworthy. In addition, the repurchase agreements are fully collateralized by the underlying instrument and are marked to market every business day. However, the use of repurchase agreements involves certain risks such as default by, or insolvency of, the other party to the transaction. RESET OPTIONS In certain instances, the series may purchase or write options on U.S. Treasury securities, which provide for periodic adjustment of the strike price and may also provide for the periodic adjustment of the premium during the term of each such option. Like other types of options, these transactions, which may be referred to as "reset" options or "adjustable strike" options grant the purchaser the right to purchase (in the case of a call) or sell (in the case of a put), a specified type of U.S. Treasury security at any time up to a stated expiration date (or, in certain instances, on such date). In contrast to other types of options, however, the price at which the underlying security may be purchased or sold under a "reset" option is determined at various intervals during the term of the option, and such price fluctuates from interval to interval based on changes in the market value of the underlying security. As a result, the strike price of a "reset" option, at the time of exercise, may be less advantageous than if the strike price had been fixed at the initiation of the option. In addition, the premium paid for the purchase of the option may be determined at the termination, rather than the initiation, of the option. If the premium for a reset option written by the series is paid at termination, the series assumes the risk that (i) the premium may be less than the premium which would otherwise have been received at the initiation of the option because of such factors as the volatility in yield of the underlying Treasury security over the term of the option and adjustments made to the strike price of the option, and (ii) the option purchaser may default on its obligation to pay the premium at the termination of the option. Conversely, where the series purchases a reset option, it could be required to pay a higher premium than would have been the case at the initiation of the option. REVERSE REPURCHASE AGREEMENTS A reverse repurchase agreement is a borrowing transaction in which the series transfers possession of a security to another party, such as a bank or broker/dealer in return for cash, and agrees to repurchase the security in the future at an agreed upon price, which includes an interest component. A series will segregate with custodian liquid assets in an amount sufficient to cover its obligations under reverse repurchase agreements with broker/dealers. No segregation is required for reverse repurchase agreements with banks. A series may borrow through reverse repurchase agreements in connection with meeting requests for the redemption of a series shares. Transactions involving reverse repurchase agreements may increase fluctuations in the market value of a series' assets and may be viewed as a form of leverage. Reverse repurchase agreements involve the risk that the market value of the securities sold by a series may decline below the price at which the series is obligated to repurchase the securities. SHORT SALES The series may seek to hedge investments or realize additional gains through short sales. The series may make short sales, which are transactions in which a series sells a security it does not own, in anticipation of a decline in the market value of that security. To complete such a transaction, the series must borrow the security to make delivery to the buyer. The series then is obligated to replace the security borrowed by purchasing it at the market price at the time of replacement. The price at such time may be more or less than the price at which the security was sold by the series. Until the security is replaced, the series is required to repay the lender any dividends or interest which accrue during the period of the loan. To borrow the security, the series also may be required to pay a premium, which would increase the cost of the security sold. The broker, to the extent necessary to meet margin requirements until the short position is closed out will retain the net proceeds of the short sale. The series also will incur transaction costs in effecting short sales. The series will incur a loss as a result of the short sale if the price of the security increases between the date of the short sale and the date on which the series replaces the borrowed security. The series will realize a gain if the price of the security declines between those dates. The amount of any gain will be decreased, and the amount of any loss increased, by the amount of the premium, dividends or interest the series may be required to pay in connection with a short sale. Whenever the series engages in short sales, it identifies liquid and unencumbered assets in an amount that, when combined with the amount of collateral deposited with the broker connection with the short sale, equals the current market value of the security sold short. 18 SHORT SALES AGAINST THE BOX The series may make short sales "against the box," i.e., when a security identical to one owned by the series is borrowed and sold short. If the series enters into a short sale against the box, it is required to segregate securities equivalent in kind and amount to the securities sold short (or securities convertible or exchangeable into such securities) and is required to hold such securities while the short sale is outstanding. The series will incur transaction costs, including interest, in connection with opening, maintaining, and closing short sales against the box. SMALL AND MID CAPITALIZATION SECURITIES Investments in small or mid capitalization companies involve greater risk than is generally associated with larger, more established companies. The securities of smaller companies may be subject to more abrupt or erratic market movements than larger companies. The securities of small or medium-sized companies are often traded over-the-counter, and may not be traded in volumes typical of securities traded on a national securities exchange. Consequently, the securities of small or medium-sized companies may have limited market stability and may be subject to more abrupt or erratic market movements than securities of larger, more established companies or the market averages in general. SPECULATIVE BONDS The series may invest in fixed income and convertible securities rated Baa by Moody's or BBB by S&P, Fitch or Duff & Phelps and comparable unrated securities. These securities, while normally exhibiting adequate protection parameters, have speculative characteristics and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to make principal and interest payments than in the case of higher grade securities. STRIPPED MORTGAGE-BACKED SECURITIES Stripped mortgage-backed securities ("SMBS") are derivative multiclass mortgage securities issued by agencies or instrumentalities of the U.S. Government, or by private originators of, or investors in, mortgage loans, including savings and loan institutions, mortgage banks, commercial banks and investment banks. SMBS are usually structured with two classes that receive different proportions of the interest and principal distributions from a pool of mortgage assets. A common type of SMBS will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class will receive most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the interest-only or "IO" class) while the other class will receive all of the principal (the principal-only or "PO" class). The yield to maturity on an IO is extremely sensitive to the rate of principal payments, including prepayments on the related underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on such security's yield to maturity. If the underlying mortgage assets experience greater than anticipated prepayments of principal, the series may fail to fully recoup its initial investment in these securities. The market value of the class consisting primarily or entirely of principal payments generally is unusually volatile in response to changes in interest rates. Because SMBS were only recently introduced, established trading markets for these securities have not yet developed, although the securities are traded among institutional investors and investment banking firms. SWAP AGREEMENTS Swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard "swap" transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or "swapped" between the parties are calculated with respect to a "notional amount," i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a "basket" of securities representing a particular index. Commonly used swap agreements include (i) interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or "cap," (ii) interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified level, or "floor," and (iii) interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels. The "notional amount" of the swap agreement is only a fictive basis on which to calculate the obligations that the parties to a swap agreement have agreed to exchange. The series' obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the "net amount"). The series' obligations under a swap agreement will be accrued daily (offset against any amounts owing to the series) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by the maintenance of a segregated account consisting of liquid assets to avoid any potential leveraging of the series' holdings. The series will not enter into a swap agreement with any single party if the net amount owed or to be received under existing contracts with that party would exceed 5% of the series' assets. Whether the series' use of swap agreements will be successful in furthering its investment objective will depend on an advisor or subadvisor's ability to correctly predict whether certain types of investments are likely to produce greater returns than other investments. Because 19 they are two party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid. Moreover, the series bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of swap agreement counterparty. The advisor or subadvisor will cause the series to enter into swap agreements only with counterparties that would be eligible for consideration as repurchase agreement counterparties under the series' repurchase agreement guidelines. Certain restrictions imposed on the series by the Internal Revenue Code may limit a series' ability to use swap agreements. The swaps market is largely unregulated. Swaps agreements generally are exempt or excluded from most provisions of the Commodity Exchange Act ("CEA") and, therefore, are not regulated as futures or commodity option transactions under the CEA. It is possible that developments in the swaps market, including potential government regulation, could adversely affect a series' ability to terminate existing swap agreements or to realize amounts to be received under such agreements. TEMPORARY BORROWING The series may borrow money for temporary purposes (e.g., to meet redemption requests or settle outstanding purchases of portfolio securities). TIME DEPOSITS Time deposits are deposits in a bank or other financial institution for a specified period of time at a fixed interest rate for which negotiable certificates are not received. U.S. GOVERNMENT OBLIGATIONS Securities issued or guaranteed as to principal and interest by the United States Government include a variety of Treasury securities, which differ only in their interest rates, maturities and times of issuance. Treasury bills have a maturity of one year or less. Treasury notes have maturities of 1 to 7 years, and Treasury bonds generally have maturity of greater than 5 years. Agencies of the United States Government which issue or guarantee obligations include, among others, Export-Import Bank of the United States, Farmers Home Administration, Federal Housing Administration, Government National Mortgage Association, Maritime Administration, Small Business Administration and The Tennessee Valley Authority. Obligations of instrumentalities of the United States Government include securities issued or guaranteed by, among others, the Federal National Mortgage Association, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal Intermediate Credit Banks, Banks for Cooperatives and the U.S. Postal Service. Securities issued or guaranteed by the Export-Import Bank of the United States, Farmers Home Administration, Federal Housing Administration, Government National Mortgage Association, Maritime Administration and Small Business Administration are supported by the full faith and credit of the U.S. Treasury. Securities issued or guaranteed by Federal National Mortgage Association and Federal Home Loan Banks are supported by the right of the issuer to borrow from the Treasury. Securities issued or guaranteed by the other agencies or instrumentalities listed above are supported only by the credit of the issuing agency. VARIABLE AND FLOATING RATE OBLIGATIONS Investments in variable or floating rate securities normally will involve industrial development or revenue bonds which provide that the rate of interest is set as a specific percentage of a designated base rate, such as rates on Treasury Bonds or Bills or the prime rate at a major commercial bank, and that a bondholder can demand payment of the obligations on behalf of the series on short notice at par plus accrued interest, which amount may be more or less than the amount the bondholder paid for them. The maturity of floating or variable rate obligations (including participation interests therein) is deemed to be the longer of (i) the notice period required before the series is entitled to receive payment of the obligation upon demand or (ii) the period remaining until the obligation's next interest rate adjustment. If not redeemed by the series through the demand feature, the obligations mature on a specified date that may range up to thirty years from the date of issuance. WHEN-ISSUED SECURITIES The series may purchase securities on a when-issued basis. New issues of certain securities are offered on a when-issued basis, that is, delivery and payment for the securities normally takes place 15 to 45 days or more after the date of the commitment to purchase. The payment obligation and the interest rate if any, that will be received on the securities are each fixed at the time the buyer enters into the commitment. The series will generally make a commitment to purchase such securities with the intention of actually acquiring the securities. However, the series may sell these securities before the settlement date if it is deemed advisable as a matter of investment strategy. When the series purchases securities on a when-issued basis, cash or liquid securities equal in value to commitments for the when-issued securities will be deposited in a segregated account with the series' custodian bank. Such segregated securities either will mature or, if necessary, be sold on or before the settlement date. Securities purchased on a when-issued basis are subject to changes in market value. Therefore, to the extent the series remains substantially fully invested at the same time that they have purchased securities on a when-issued basis, there will be greater fluctuations in the net asset values than if the series merely set aside cash to pay for when-issued securities. In addition, there will be a greater potential for the realization of capital gains. When the time comes to pay for when-issued securities, the series 20 will meet its obligations from then available cash flow, the sales of securities or, although it would not normally expect to do so, from the sale of the when-issued securities themselves (which may have a value greater or less than the payment obligation). Lastly, investing in when-issued securities includes the risk that the securities may never be issued, in which event the series may incur expenses associated with unwinding such transactions. "YIELD CURVE" OPTIONS The series may enter into options on the "spread," or yield differential, between two fixed income securities, in transactions referred to as "yield curve" options. In contrast to other types of options, a yield curve option is based on the difference between the yields of designated securities, rather than the prices of the individual securities, and is settled through cash payments. Accordingly, a yield curve option is profitable to the holder if this differential widens (in the case of a call) or narrows (in the case of a put), regardless of whether the yields of the underlying securities increase or decrease. Yield curve options may be used for the same purposes as other options on securities. Specifically, the series may purchase or write such options for hedging purposes. For example, the series may purchase a call option on the yield spread between two securities, if it owns one of the securities and anticipates purchasing the other security and wants to hedge against an adverse change in the yield spread between the two securities. The series may also purchase or write yield curve options for other than hedging purposes (i.e., in an effort to increase its current income) if, in the judgment of the advisor, the series will be able to profit from movements in the spread between the yields of the underlying securities. The trading of yield curve options is subject to all of the risks associated with the trading of other types of options. In addition, however, such options present risk of loss even if the yield of one of the underlying securities remains constant, if the spread moves in a direction or to an extent which was not anticipated. Yield curve options written by the series will be "covered." A call (or put) option is covered if the series holds another call (or put) option on the spread between the same two securities and owns liquid and unencumbered assets sufficient to cover the series' net liability under the two options. Therefore, the series' liability for such a covered option is generally limited to the difference between the amount of the series' liability under the option written by the series less the value of the option held by the series. Yield curve options may also be covered in such other manner as may be in accordance with the requirements of the counterparty with which the option is traded and applicable laws and regulations. Yield curve options are traded over-the-counter and because they have been only recently introduced, established trading markets for these securities have not yet developed. ZERO AND DEFERRED COUPON DEBT SECURITIES The series may invest in debt obligations that do not make any interest payments for a specified period of time prior to maturity ("deferred coupon" obligations) or until maturity ("zero coupon" obligations). Because deferred and zero coupon bonds do not make interest payments for a certain period of time, they are purchased by the series at a deep discount and their value fluctuates more in response to interest rate changes than does the value of debt obligations that make current interest payments. The degree of fluctuation with interest rate changes is greater when the deferred period is longer. Therefore, there is a risk that the value of the series' shares may decline more as a result of an increase in interest rates than would be the case if the series did not invest in deferred or zero coupon bonds. ADDITIONAL INVESTMENT POLICIES OF CERTAIN SERIES - -------------------------------------------------------------------------------- The following policies are non-fundamental and may be changed without shareholder vote. PHOENIX-ABERDEEN INTERNATIONAL SERIES The Phoenix-Aberdeen International Series may invest up to 5% of its net assets in warrants and stock rights, but no more than 2% of its net assets in warrants and stock rights not listed on the NYSE or the American Stock Exchange. This series also may hedge its foreign currency exchange rate risk by engaging in currency financial futures and options transactions. The series may invest in nonconvertible fixed income securities of non-U.S. issuers when the advisor believes that such securities are appropriate for the achievement of the series' investment objective. The nonconvertible fixed income securities may consist of: corporate notes, bonds, debentures and other securities (such as Euro-currency instruments) of non-U.S. issuers that are rated within the three highest rating categories of rating services or, if unrated, are deemed by the advisor to be of comparable credit quality; and securities issued by foreign governments and supranational agencies (such as the World Bank). PHOENIX-ABERDEEN NEW ASIA SERIES The Phoenix-Aberdeen New Asia Series may invest up to 5% of its net assets in warrants and stock rights, but no more than 2% of its net assets in warrants and stock rights not listed on the NYSE or the American Stock Exchange. This series also may hedge its foreign currency exchange rate risk by engaging in currency financial futures and options transactions. PHOENIX-AIM MID-CAP EQUITY SERIES To the extent that the Phoenix-AIM Mid-Cap Equity Series enters into futures contracts, options on futures 21 contracts, and options on foreign currencies traded on a CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums required to establish those positions (excluding the amount by which options are "in-the-money") will not exceed 5% of the total assets of the series, after taking into account unrealized profits and unrealized losses on contracts it has entered into. This does not limit the percentage of the series assets at risk to 5%. The series will not write options if, immediately after such sale, the aggregate value of securities or obligations underlying the outstanding options exceeds 20% of the series' total assets. The series will not purchase options if, at any time of the investment, the aggregate premiums paid for the options exceed 5% of the series' total assets. The series does not currently intend to invest in inverse floating rate obligations, PIK bonds, private placements, privatizations, reset options, variable or floating rate securities, or "yield curve" options. The series does not invest in speculative bonds. The series also will not lend portfolio securities with a value of more than 33% of its assets. The series will not invest more than 25% of its net assets in REITS. The series may participate in the initial public offering ("IPO") market, and a portion of the series' returns could be attributable to its investments in IPOs, which would have a magnified impact due to the series' small asset base. As the series' assets grow, it is probable that the effect of the series' investment in IPOs on its total returns will decline, which may reduce the series' total returns. PHOENIX-ALLIANCE/BERNSTEIN GROWTH + VALUE SERIES The Phoenix-Alliance/Bernstein Growth + Value Series will not lend portfolio securities with a value of more than 30% of its assets. The series will not invest more than 25% of its net assets in REITS. PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES As the Phoenix-Duff & Phelps Real Estate Securities Series indirectly invests in REITs, investors will bear not only the proportionate share of the expenses of the series but also, indirectly, similar expenses of underlying REITs. The Phoenix-Duff & Phelps Real Estate Securities Series will not invest in real estate directly, but only in securities issued by real estate companies. However, the portfolio may be subject to risks similar to those associated with the direct ownership of real estate because of its policy of concentrating in the securities of companies in the real estate industry. These include declines in the value of real estate, risks related to general and local economic conditions, dependence on management skill, cash flow dependence, possible lack of availability of long-term mortgage funds, overbuilding, extended vacancies of properties, decreased occupancy rates and increased competition, increases in property taxes and operating expenses, changes in neighborhood values and the appeal of the properties to tenants and changes in interest rates. The Phoenix-Duff & Phelps Real Estate Securities Series may invest in debt securities rated BBB or better by S&P or Baa or better by Moody's or, if not rated, are judged to be of comparable quality as determined by DPIM. In choosing debt securities for purchase by the series, DPIM will employ the same analytical and valuation techniques utilized in managing the equity portion of the Phoenix-Duff & Phelps Real Estate Securities Series holdings and will invest in debt securities only of companies that satisfy DPIM's investment criteria. PHOENIX-ENGEMANN CAPITAL GROWTH SERIES The series may invest any amount of its assets in any class or type of security believed by the subadvisor to offer the potential for capital appreciation over the intermediate and long term, including preferred stocks, investment-grade bonds, convertible preferred stocks and convertible debentures. Distribution of investment income, such as dividends and interest, is incidental in the selection of investments. Diversification among market sectors will be a factor in selecting securities for the series. However, the subadvisor will put greater emphasis on selecting securities it believes have good potential for appreciation rather than upon wide diversification. The series may invest up to 25% of its net assets in securities of foreign (non-U.S.) issuers. The series may invest in a broad range of foreign securities, including equity, debt and convertible securities and foreign government securities. Issuers may be in established-market countries and emerging-market countries. PHOENIX-ENGEMANN SMALL & Mid-Cap Growth Series The Phoenix-Engemann Capital Growth Series may only purchase a call option to terminate a previously written call option. (See "Writing Covered Call Options.") PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH SERIES The Phoenix-Engemann Small & Mid-Cap Growth may use financial futures contracts and related options to hedge against changes in the market value of the portfolio securities which it intends to purchase. The series may also invest up to 100% of its assets in cash and certain short- and medium-term fixed income securities for temporary defensive purposes. PHOENIX-GOODWIN MONEY MARKET SERIES By limiting the maturity of its investments, this series seeks to lessen the changes in the value of its assets caused by market factors. This series, consistent with its investment objective, will attempt to maximize yield through portfolio trading. This may involve selling portfolio instruments and purchasing different instruments to take advantage of disparities of yields in different segments of the high-grade money market or 22 among particular instruments within the same segment of the market. It is expected that the series' portfolio transactions generally will be with issuers or dealers in money market instruments acting as principal. Accordingly, this series will normally not pay any brokerage commissions. The value of the securities in the Phoenix-Goodwin Money Market Series' portfolio can be expected to vary inversely to changes in prevailing interest rates, with the amount of such variation depending primarily on the period of time remaining to maturity of the security. Long-term obligations may fluctuate more in value than short-term obligations. If interest rates increase after a security is purchased, the security, if sold, could be sold at a loss. On the other hand, if interest rates decline after a purchase, the security, if sold, could be sold at a profit. If, however, the security is held to maturity, no gain or loss will be realized as a result of interest rate fluctuations, although the day-to-day valuation of the portfolio could fluctuate. Substantial withdrawals of the amounts held in the Phoenix-Goodwin Money Market Series could require it to sell portfolio securities at a time when a sale might not be favorable. The value of a portfolio security also may be affected by other factors, including factors bearing on the credit-worthiness of its issuer. A discussion of amortized cost is contained under "Determination of Net Asset Value." The Phoenix-Goodwin Money Market Series may only purchase a call option to terminate a previously written call option. (See "Writing Covered Call Options.") PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES The Phoenix-Goodwin Multi-Sector Fixed Income Series may only purchase a call option to terminate a previously written call option. (See "Writing Covered Call Options.") PHOENIX-HOLLISTER VALUE EQUITY SERIES The series may invest in convertible securities. The series will invest only in the four highest rating categories of convertible securities, commonly called "investment grade" securities. If the series purchases an investment grade security that loses its investment grade rating, the series is not required to sell the security. The series may lend portfolio securities in amounts up to one-third the value of its total assets to increase its investment returns. PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES The investment strategy of the Phoenix-J.P. Morgan Research Enhanced Index Series is to earn a total return modestly in excess of the total return performance of the S&P 500 (including the reinvestment of dividends) while maintaining a volatility of return similar to the S&P 500. The series is appropriate for investors who seek a modestly enhanced total return relative to that of large- and medium-sized U.S. companies typically represented in the S&P 500. The portfolio intends to invest in securities of approximately 325 issuers, which securities are rated by the series' subadvisor to have above-average expected returns. The series seeks to achieve its investment objective through fundamental analysis, systematic stock valuation and disciplined portfolio construction. [diamond] Research: The subadvisors of the series -- more than 20 domestic equity analysts, each an industry specialist with an average of over 12 years experience, follow over 650 predominantly large- and medium-sized U.S. companies. A substantial majority of these companies are issuers of securities that are included in the S&P 500 Index. The analysts' research goal is to forecast normalized, longer-term earnings and dividends for the companies that they cover. [diamond] Valuation: The analysts' forecasts are converted into comparable expected returns by a dividend discount model, which calculates those expected returns by solving for the rate of return that equates the company's current stock price to the present value of its estimated long-term earnings power. Within each sector, companies are ranked by their expected return and grouped into quintiles; those with the highest expected returns (Quintile 1) are deemed the most undervalued relative to their long-term earnings power, while those with the lowest expected returns (Quintile 5) are deemed the most overvalued. [diamond] Stock selection: A diversified portfolio is constructed using disciplined buy and sell rules. Sector weightings will generally approximate those of the S&P 500. The series will normally be principally comprised, based on the dividend discount model, of stocks in the first 4 quintiles. Finally, the series holds a large number of stocks to enhance its diversification. Characteristics such as trust interests, limited partnership interests, preferred stocks, warrants, rights and securities convertible into common stock. The series' primary equity investments will be the common stock of large- and medium-sized U.S. companies with market capitalization above $1 billion. Such securities will be listed on a national securities exchange or traded in the over-the-counter market. The series may invest in similar securities of foreign corporations, provided that the securities of such corporations are included in the S&P 500. The series intends to invest up to 5% of its respective net assets in warrants and stock rights, but no more than 2% of its net assets in warrants and stock rights not listed on the NYSE or the American Stock Exchange. The series intends to manage its portfolio actively in pursuit of its investment objective. Since the series has a long-term investment perspective, it does not intend to respond to short-term market fluctuations or to acquire securities for the purpose of 23 short-term market fluctuations or to acquire securities for the purpose of short-term trading; however, it may take advantage of short-term trading opportunities that are consistent with its objective. PHOENIX-JANUS FLEXIBLE INCOME SERIES The Phoenix-Janus Flexible Income Series may hedge its foreign currency exchange rate risk by engaging in currency financial futures and options transactions. PHOENIX-JANUS GROWTH SERIES The Phoenix-Janus Growth Series may hedge its foreign currency exchange rate risk by engaging in currency financial futures and options transactions. PHOENIX-LAZARD INTERNATIONAL EQUITY SELECT SERIES The Phoenix-Lazard International Equity Select Series may invest up to 20% of its net assets in debt securities and short-term money market instruments. The series may invest up to 5% of its total assets in warrants, except that this limitation does not apply to warrants purchased by the series that are sold in units with, or attached to, other securities. Although the series' transactions in financial futures contracts and related options will be primarily for hedging purposes, the series may also enter into such transactions to provide a substitute for purchasing or selling specific securities or to increase potential income gain. When the subadvisor determines that adverse market conditions exist, the series may adopt a temporary defensive position and invest some or all of its assets in money market instruments, including U.S. government securities, repurchase agreements, bank obligations and commercial paper and other short-term obligations. PHOENIX-LAZARD SMALL-CAP VALUE SERIES Equity securities of small-cap companies in which the series may invest generally have one or more of the following characteristics: [diamond] the potential to become a larger factor in the company's business sector [diamond] significant debt but high levels of free cash flow [diamond] a relatively short corporate history with the expectation that the business may grow The series may invest up to 20% of its assets in debt securities and short-term money market instruments. The series may invest up to 5% of its total assets in warrants, except that this limitation does not apply to warrants purchased by the series that are sold in units with, or attached to, other securities. Although the series' transactions in financial futures contracts and related options will be primarily for hedging purposes, the series may also enter into such transactions to provide a substitute for purchasing or selling specific securities or to increase potential income gain. When the subadvisor determines that averse market conditions exist, the series may adopt a temporary defensive position and invest some or all of its assets in money market instruments, including U.S. government securities, repurchase agreements, bank obligations and commercial paper and other short-term obligations. PHOENIX-LAZARD U.S. MULTI-CAP SERIES The Phoenix-Lazard U.S. Multi-Cap Series may invest up to 20% of its assets in debt securities and short-term money market instruments. The series may invest up to 5% of its total assets in warrants, except that this limitation does not apply to warrants purchased by the series that are sold in units with, or attached to, other securities. Although the series' transactions in financial futures contracts and related options will be primarily for hedging purposes, the series may also enter into such transactions to provide a substitute for purchasing or selling specific securities or to increase potential income gain. When the subadvisor determines that averse market conditions exist, the series may adopt a temporary defensive position and invest some or all of its assets in money market instruments, including U.S. government securities, repurchase agreements, bank obligations and commercial paper and other short-term obligations. PHOENIX-MFS INVESTORS GROWTH STOCK SERIES The Phoenix-MFS Investors Growth Stock Series does not invest in Brady bonds, dollar denominated foreign debt securities, indexed securities, inverse floating rate obligations, warrants, PIK bonds, reset options, reverse repurchase agreements, short sales against the box, speculative bonds, stripped mortgage-backed securities, swap agreements, "yield curve" options, or zero and deferred coupon debt securities. The series will not lend portfolio securities with a value of more than 30% of its assets, and does not purchase loans or other direct indebtedness. PHOENIX-MFS INVESTORS TRUST SERIES The Phoenix-MFS Investors Trust Series does not invest in Brady bonds, corporate asset-backed securities, dollar denominated foreign debt securities, indexed securities, inverse floating rate obligations, mortgage-backed securities, options, reset options, reverse repurchase agreements, speculative bonds, stripped mortgage-backed securities, swap agreements or "yield curve" options. The series will not lend portfolio securities with a value of more than 30% of its assets, and does not purchase loans or other direct indebtedness. PHOENIX-MFS VALUE SERIES The Phoenix-MFS Value Series does not invest in inverse floating rate obligations, reverse repurchase agreements, or short sales against the box. The series will not lend portfolio securities with a value of more than 30% of its assets. 24 PHOENIX-OAKHURST GROWTH AND INCOME SERIES The Phoenix-Oakhurst Growth and Income Series intends to invest up to 5% of its net assets in warrants and stock rights, but no more than 2% of its net assets in warrants and stock rights not listed on the NYSE or the American Stock Exchange. PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES Immediately after entering into an opening option position, the total value of all open option positions based on exercise price will not exceed 10% of the Phoenix-Oakhurst Strategic Allocation Series' total assets. Market Segment Investments. The Phoenix-Oakhurst Strategic Allocation Series seeks to achieve its investment objective by investing in the 3 market segments of stocks, bonds and money market instruments described below. [diamond] STOCKS--common stocks and other equity-type securities such as preferred stocks, securities convertible into common stock and warrants; [diamond] BONDS--bonds and other debt securities with maturities generally exceeding one year, including: o publicly-offered straight debt securities having a rating within the 4 highest grades as determined by Moody's Investors Service, Inc. ("Moody's") (Aaa, Aa, A or Baa) or Standard & Poor's Corporation ("Standard & Poor's") (AAA, AA, A or BBB) or, if unrated, those publicly-offered straight debt securities which are judged by the Account to be of equivalent quality to securities so rated; o obligations issued, sponsored, assumed or guaranteed as to principal and interest by the U.S. Government or its agencies or instrumentalities; o obligations (payable in U.S. dollars) issued or guaranteed as to principal and interest by the Government of Canada or of a Province of Canada or any instrumentality or political subdivision thereof, provided such obligations have a rating within the highest grades as determined by Moody's (Aaa, Aa or A) or Standard & Poor's (AAA, AA or A) and do not exceed 25% of the Phoenix-Oakhurst Strategic Allocation Series' total assets; o publicly offered straight debt securities issued or guaranteed by a national or state bank or bank holding company (as defined in the Federal Bank Holding Company Act, as amended) having a rating within the 3 highest grades as determined by Moody's (Aaa, Aa or A) or Standard & Poor's (AAA, AA or A), and certificates of deposit of such banks; and o high yield, high risk fixed income securities (commonly referred to as "junk bonds") having a rating below Baa by Moody's Investors Service, Inc. or BBB by Standard & Poor's Corporation or unrated securities of comparable quality provided such securities do not exceed 10% of the Phoenix-Oakhurst Strategic Allocation Series' total assets. [diamond] MONEY MARKET--money market instruments and other debt securities with maturities generally not exceeding one year, including: o those money market instruments described in this Statement of Additional Information; and o reverse repurchase agreements with respect to any of the foregoing obligations. Reverse repurchase agreements are agreements in which the series, as the seller of the securities, agrees to repurchase them at an agreed time and price. This transaction constitutes a borrowing of money by the seller of the securities. The series will maintain sufficient funds in a segregated account with its custodian to repurchase securities pursuant to any outstanding reverse repurchase agreement. The series is required to maintain asset coverage of at least 300% at all times for all obligations under reverse repurchase agreements. Trading. The advisor will engage in trading when it believes that the trade, net of transaction costs, will improve interest income or capital appreciation potential, or will lessen capital loss potential. Whether these goals will be achieved through trading depends on the advisor's ability to evaluate particular securities and anticipate relevant market factors, including interest rate trends and variations. If the advisor's evaluations and expectations prove to be incorrect, the series' income or capital appreciation may be reduced and its capital losses may be increased. Portfolio trading involves transaction costs. Purchases and sales of securities will be made, whenever necessary, in the advisor's view, to achieve the total return investment objective of the series without regard to the resulting brokerage costs. In addition to the traditional investment techniques for purchasing and selling and engaging in trading, the Phoenix-Oakhurst Strategic Allocation Series may enter into financial futures and options contracts. PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES The Phoenix-Sanford Bernstein Global Value Series may hedge its foreign currency exchange rate risk by engaging in currency financial futures and options transactions. PHOENIX-SENECA STRATEGIC THEME SERIES The Phoenix-Seneca Strategic Theme Series may use financial futures contracts and related options to hedge against changes in the market value of the portfolio securities which it intends to purchase. The Phoenix-Seneca Strategic Theme Series intends to invest up to 5% of its respective net assets in warrants and stock rights, but no more than 2% of its net assets in warrants and stock rights not listed on the NYSE or the American Stock Exchange. 25 PHOENIX-STATE STREET RESEARCH SMALL-CAP GROWTH SERIES Investments in initial public offerings ("IPO") can have a significant positive impact on the series' performance. The positive effect of investments in IPOs may not be sustainable because of a number of factors. The series may not be able to buy shares in some IPOs or may be able to buy only a small number of shares. Also, the series may not be able to buy the shares at the commencement of the offering and the general availability and performance of IPOs are dependent on market psychology and economic conditions. Also, the relative performance impact of IPOs is likely to decline as the series grows. The series may engage in currency exchange transactions in order to protect against the effect of uncertain future exchange rates on securities denominated in foreign currencies. The series will conduct its currency exchange transactions either on a spot (i.e., cash) basis at the rate prevailing in the currency exchange market, or by entering into forward contracts to purchase or sell currencies. The series dealings in forward currency exchange contracts will be limited to hedging involving either specific transactions or aggregate portfolio positions. The series may hold up to 100% of its assets in cash or high-quality debt securities for temporary defensive purposes. PHOENIX-VAN KAMPEN FOCUS EQUITY SERIES The Phoenix-Van Kampen Focus Equity Series may enter into financial futures contracts for non-hedging purposes to further the series' investment objective and enhance returns. The series, however, will not use financial futures contracts or other derivative products in a manner that creates leverage, except to the extent expressly permitted by the series' investment policies. The Phoenix-Van Kampen Focus Equity Series also may hedge its foreign currency exchange rate risk by engaging in currency forwards or financial futures and options transactions. A futures contract for the receipt of a debt obligation will be offset by any asset, including equity securities and noninvestment grade debt so long as the asset is liquid, unencumbered and marked to market daily and held in a segregated account with the custodian bank for the series in an amount sufficient to cover the cost of purchasing the obligation. The Phoenix-Van Kampen Focus Equity Series may invest up to 100% of its assets in cash and certain short- and medium-term fixed income securities for temporary defensive purposes. The Phoenix-Van Kampen Focus Equity Series may use structured notes. These are derivative securities for which the amount of principal repayment and/or interest payments is based upon the movement of one or more "factors." These factors include, but are not limited to, currency exchange rates, interest rates (such as the prime lending rate and LIBOR) and stock indices, such as the S&P 500. In some cases, the impact of the movements of these factors may increase or decrease through the use of multipliers or deflators. Structured notes may be designed to have particular quality and maturity characteristics and may vary from money market quality to below investment grade. Depending on the factor used and the use of multipliers or deflators, however, changes in interest rates and movement of the factor may cause significant price fluctuations or may cause particular Structured Notes to become illiquid. The series will use Structured Notes to tailor its investments to the specific risks and returns the subadvisor wishes to accept while avoiding or reducing certain other risks. INVESTMENT RESTRICTIONS - -------------------------------------------------------------------------------- The Fund's fundamental policies as they affect any series cannot be changed without the approval of a vote of a majority of the outstanding shares of such series, which is the lesser of (i) 67% or more of the voting securities of such series present at a meeting if the holders of more than 50% of the outstanding voting securities of such series are present or represented by proxy or (ii) more than 50% of the outstanding voting securities of such series. A proposed change in fundamental policy or investment objective will be deemed to have been effectively acted upon by any series if a majority of the outstanding voting securities of that series votes for the approval of the proposal as provided above, notwithstanding (1) that such matter has not been approved by a majority of the outstanding securities of any other series affected by such matter and (2) that such matter has not been approved by a majority of the outstanding voting securities of the Fund. Compliance with applicable percentage thresholds is measured as of the time of initial investment. FUNDAMENTAL INVESTMENT RESTRICTIONS The following investment restrictions are fundamental policies of the series described in this SAI and may not be changed except as described above. (1) A series may not, with respect to 75% of its total assets, purchase securities of an issuer (other than the U.S. Government, its agencies, instrumentalities or authorities or repurchase agreements collateralized by U.S. Government securities and other investment companies, if: (a) such purchase would, at the time, cause more than 5% of the series' total assets, taken at market value, to be invested in the securities of such issuer; or (b) such purchase would, at the time, result in more than 10% of the outstanding voting securities of such issuer being held by the series. 26 This restriction does not apply to the Phoenix-Deutsche Dow 30, Phoenix-Deutsche Nasdaq-100 Index(R), Phoenix-Duff & Phelps Real Estate Securities or Phoenix-Van Kampen Focus Equity Series. (2) A series may not purchase securities in a given industry if, after giving effect to the purchase, more than 25% of its total assets would be invested in the securities of one or more issuers conducting business activities in the same industry (excluding the U.S. Government or its agencies or instrumentalities). This restriction does not apply to the Phoenix-Duff & Phelps Real Estate Securities, Phoenix-Deutsche Dow 30 or Phoenix-Deutsche Nasdaq-100 Index(R) or Phoenix-Van Kampen Focus Equity Series. In addition, the Phoenix-Goodwin Money Market Series and Phoenix-Oakhurst Strategic Allocation Series may invest more than 25% of their assets in the banking industry. (3) A series may not issue senior securities in contravention of the 1940 Act. Activities permitted by SEC exemptive orders or staff interpretations shall not be deemed prohibited by this restriction. (4) A series may not borrow money, except (i) in amounts not to exceed one third of the value of the series' total assets (including the amount borrowed) from banks, and (ii) up to an additional 5% of its total assets from banks or other lenders for temporary purposes. For purposes of this restriction, (a) investment techniques such as margin purchases, short sales, forward commitments, and roll transactions, (b) investments in instruments such as futures contracts, swaps, and options, and (c) short-term credits extended in connection with trade clearances and settlement shall not constitute borrowing. (5) A series may not underwrite the securities issued by other persons, except to the extent that, in connection with the disposition of portfolio securities, a series may be deemed to be an underwriter under the applicable law. (6) A series may not purchase or sell real estate, except that a series may (i) acquire or lease office space for its own use, (ii) invest in securities of issuers that invest in real estate or interests therein, (iii) invest in mortgage-related securities and other securities that are secured by real estate or interests therein, or (iv) hold and sell real estate acquired by the series as a result of the ownership of securities. (7) A series may not make loans, except that a series may (i) lend portfolio securities, (ii) enter into repurchase agreements, (iii) purchase all or a portion of an issue of debt securities, bank loan participation interests, bank certificates of deposit, bankers' acceptances, debentures or other securities, whether or not the purchase is made upon the original issuance of the securities, and (iv) participate in an interfund lending program with other registered investment companies. (8) A series may not purchase or sell commodities or commodity contracts, except a series may purchase and sell derivatives (including, but not limited to, options, futures contracts and options on futures contracts) whose value is tied to the value of a financial index or a financial instrument or other asset (including, but not limited to, securities indices, interest rates, securities, currencies and physical commodities). PORTFOLIO TURNOVER - -------------------------------------------------------------------------------- The portfolio turnover rate of each series is calculated by dividing the lesser of purchases or sales of portfolio securities during the fiscal year by the monthly average of the value of the series' securities (excluding all securities, including options, with maturities at the time of acquisition of one year or less). All long-term securities, including long-term U.S. Government securities, are included. A high rate of portfolio turnover generally involves correspondingly greater brokerage commission expenses, which must be borne directly by the series. Turnover rates may vary greatly from year to year as well as within a particular year and also may be affected by cash requirements for redemptions of each series' shares by requirements that enable the Fund to receive certain favorable tax treatments. The portfolio turnover rates for each series (other than the Phoenix-Goodwin Money Market Series) are set forth under "Financial Highlights" in the prospectus. The portfolio turnover rates for the Phoenix-AIM Mid-Cap Equity, Phoenix-Alliance/Bernstein Growth + Value, Phoenix-Lazard International Equity Select, Phoenix-Lazard Small-Cap Value, Phoenix-Lazard U.S. Multi-Cap, Phoenix-Lord Abbett Bond-Debenture, Phoenix-Lord Abbett Large-Cap Value, Phoenix-Lord Abbett Mid-Cap Value, Phoenix-MFS Investors Growth Stock, Phoenix-MFS Investors Trust, Phoenix-MFS Value, Phoenix-State Street Research Long Duration, and Phoenix-State Street Research Small-Cap Growth Series are for less than a full year. 27 MANAGEMENT OF THE FUND - -------------------------------------------------------------------------------- The Board of Trustees supervises the business and affairs of the Fund under the laws of The Commonwealth of Massachusetts and the Declaration of Trust. The Trustees and executive officers of the Fund and their principal occupations for the last five years are set forth below. There is no stated term of office for Trustees of the Fund.
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN FUND COMPLEX OTHER TRUSTEESHIPS/ NAME, ADDRESS, (DOB), AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS POSITION(S) WITH TRUST TIME SERVED DURING PAST 5 YEARS TRUSTEE HELD BY TRUSTEE - ------------------------------------------------------------------------------------------------------------------------------------ Frank M. Ellmer, CPA Since 1999 Retired 36 None 704 SW Lake Charles Circle Port St. Lucie, FL 34986 (4/11/40) Trustee - ------------------------------------------------------------------------------------------------------------------------------------ John A. Fabian Since 1999 Retired 36 None 497 Hensler Lane Oradell, NJ 07649 (2/5/34) Trustee - ------------------------------------------------------------------------------------------------------------------------------------ Roger A. Gelfenbien Since 2000 Retired 36 Chairman, Board of 37 Stonegate Drive Trustees at The Wethersfield, CT 06109 University of (5/14/43) Connecticut Trustee (1997-present). Director, USAllianz Variable Insurance Product Trust, 23 funds (1999-present). - ------------------------------------------------------------------------------------------------------------------------------------ Eunice S. Groark Since 1999 Self-employed 36 Director, Peoples' 35 Saddle Ridge Drive Bank Bloomfield, CT 06002 (1995-present) (2/1/38) Trustee - ------------------------------------------------------------------------------------------------------------------------------------ Frank E. Grzelecki Since 2000 Retired; previously Managing Director, 36 Director, 312 Greenley Road Saugatuck Associates, Inc. (1999-2000); Barnes Group, Inc. New Canaan, CT 06840 Vice Chairman, (1997-1998), (1997-present). (6/19/37) President/Chief Operating Officer Trustee (1992-1997), Handy & Harman, Trenwick Group, LTD (1999-2001) - ------------------------------------------------------------------------------------------------------------------------------------ John R. Mallin Since 1999 Principal/Attorney, Cummings & Lockwood, 36 None Cummings & Lockwood LLC (1996-present) Cityplace I Hartford, CT 06103 (7/28/50) Trustee - ------------------------------------------------------------------------------------------------------------------------------------ Timothy P. Shriver Since 1999 President and Chief Executive Officer, 36 None Special Olympics, Inc. Special Olympics, Inc. (1996-present) 1325 G Street, N.W. #500 Washington, D.C. 20005 (8/29/59) Trustee - ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED TRUSTEES - ------------------------------------------------------------------------------------------------------------------------------------ Simon Y. Tan* Since 1999 Various positions, including Executive 36 Director, One American Row Vice President, Phoenix Life Insurance Phoenix-Aberdeen Hartford, CT 06102 Company (1982-present) International (2/17/52) Advisors, LLC. President Director and President (1999-present) Phoenix Variable Advisors, Inc. - ------------------------------------------------------------------------------------------------------------------------------------
28
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN FUND COMPLEX OTHER TRUSTEESHIPS/ NAME, ADDRESS, (DOB), AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS POSITION(S) WITH TRUST TIME SERVED DURING PAST 5 YEARS TRUSTEE HELD BY TRUSTEE - ------------------------------------------------------------------------------------------------------------------------------------ Michael J. Gilotti* Since 2002 Executive Vice President, The Phoenix 36 N/A One American Row Edge Series Fund (1999-present), Senior Hartford, CT 06102 Vice President, Phoenix Life Insurance (05/25/47) Company (1999-present); Director Executive Vice President (2000-present), Phoenix Variable Advisors, Inc; Vice President, Bank and Broker/Dealer Markets, Aetna Retirement Services (1994-1999) - ------------------------------------------------------------------------------------------------------------------------------------ OFFICER(S) WHO ARE NOT TRUSTEES - ------------------------------------------------------------------------------------------------------------------------------------ Nancy G. Curtiss Since 1994 Vice President, Treasurer and Principal N/A N/A 56 Prospect Street Accounting Officer, The Phoenix Edge Hartford, CT 06115 Series Fund(1994-present), Phoenix Funds (1994-present), Phoenix Duff & Phelps Institutional Mutual Funds (1996-present), (11/24/52) Phoenix-Aberdeen Series Fund (1996-present) Vice President, Treasurer and and Phoenix-Seneca Funds (2000-present). Principal Accounting Officer Vice President and Treasurer (1994-present), Phoenix Equity Planning Corporation. - ------------------------------------------------------------------------------------------------------------------------------------ Richard J. Wirth Since 2001 Vice President, Secretary and Counsel, N/A N/A One American Row The Phoenix Edge Series Fund. Vice Hartford, CT 06102 President and Insurance and Investment (11/14/58) Products Counsel. Phoenix Life Vice President, Insurance Company (1993-present). Secretary and Counsel - ------------------------------------------------------------------------------------------------------------------------------------ Doreen A. Bonner Since 1999 Director, Product and Market Development, N/A N/A One American Row Phoenix Life Insurance Company Hartford, CT 06102 (1980-present) (2/21/56) Vice President and Compliance Officer - ------------------------------------------------------------------------------------------------------------------------------------
* The individuals listed above are "interested persons" of the Trust, as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended, and the rules and regulations thereunder. None of the Trustees or officers directly own shares of the Fund. As of April 1, 2002, the Trustees and officers as a group owned variable contracts that entitled them to give voting instructions with respect to less than 1% of the outstanding shares of the Fund. COMMITTEES OF THE BOARD AUDIT COMMITTEE. The Board has an Audit Committee comprised of entirely independent Trustees. Audit Committee members are Frank M. Ellmer, John A. Fabian, Roger A. Gelfenbien and John R. Mallin. The Audit Committee meets with the Fund's independent auditors to review the scope of their services, including non-audited functions, as well as the results of their examination of the Fund's financial statements. The Audit Committee also meets with the independent auditors to review the adequacy of the Fund's accounting policies and procedures. The Audit Committee met four times in 2001. NOMINATING COMMITTEE. The Board has a Nominating Committee that selects and nominates new candidates for election as non-interested Trustees. The Nominating Committee will not consider nominees recommended by Policyholders or Contractowners. John A. Fabian, Eunice S. Groark, Frank E. Grzelecki and Timothy P. Shriver comprise the Nominating Committee. The Nominating Committee did not meet in 2001. EXECUTIVE COMMITTEE. Eunice S. Groark, John R. Mallin and Frank M. Ellmer serve as members of the Executive Committee of the Board of Trustees. The Executive Committee is responsible for authorizing management of the Fund to file amendments to the Fund's registration statement to establish new series and to undertake any other task or responsibility that the Board of Trustees may, from time to time, assign to it. The Executive Committee met once in 2001. COMPENSATION TABLE Trustee costs are allocated equally to each of the series of the Fund. Officers and employees of the advisor who are "interested persons" are compensated by the advisor and receive no compensation from the Fund. Trustees receive no compensation from any other fund in the complex. Each independent Trustee receives from the Fund a $3,000 quarterly stipend plus $2,000 for each Board meeting attended. Committee members receive an additional fee of $2,000 for each committee meeting attended. In addition, the Fund reimburses each of the independent Trustees for travel and other expenses incurred in connection with attendance at such meetings. Other officers and Trustees of the Fund receive no compensation or expense reimbursement. Trustees are not entitled to receive any retirement benefits or deferred compensation from the 29 Fund. The Trustees received the following compensation from the Fund for the year ended December 31, 2001: - ---------------------------------------------------------------- NAME AGGREGATE COMPENSATION FROM FUND - ---------------------------------------------------------------- Frank M. Ellmer $30,000 - ---------------------------------------------------------------- John A. Fabian $28,000 - ---------------------------------------------------------------- Roger A. Gelfenbien $28,000 - ---------------------------------------------------------------- Eunice S. Groark $22,000 - ---------------------------------------------------------------- Frank E. Grzelecki $20,000 - ---------------------------------------------------------------- John R. Mallin $30,000 - ---------------------------------------------------------------- Timothy P. Shriver $16,000 - ---------------------------------------------------------------- Simon Y. Tan None - ---------------------------------------------------------------- Dona D. Young None - ---------------------------------------------------------------- TRUSTEE OWNERSHIP OF SECURITIES Set forth in the table below is the dollar range of equity securities by each Trustee as of December 31, 2001. - ------------------------------------------------------------------ AGGREGATE DOLLAR RANGE OF TRUSTEE DOLLAR RANGE OF OWNERSHIP IN ALL EQUITY SECURITIES SERIES OVERSEEN BY IN A SERIES TRUSTEE IN FAMILY OF NAME OF TRUSTEE OF THE FUND INVESTMENT COMPANIES(1) - ------------------------------------------------------------------ Frank M. Ellmer None None - ------------------------------------------------------------------ John A. Fabian None None - ------------------------------------------------------------------ Roger A. Gelfenbien None None - ------------------------------------------------------------------ Eunice S. Groark None None - ------------------------------------------------------------------ Frank E. Grzelecki None None - ------------------------------------------------------------------ John R. Mallin None None - ------------------------------------------------------------------ Timothy P. Shriver $50,000-100,000 $50,000-100,000 - ------------------------------------------------------------------ Simon Y. Tan None None - ------------------------------------------------------------------ Dona D. Young None None - ------------------------------------------------------------------ (1)For the purposes of this table, the Fund has been considered to comprise the relevant Family of Investment Companies. At December 31, 2001, the Trustees and officers as a group owned less than 1% of the then outstanding shares of each Fund. INTERESTS OF INDEPENDENT TRUSTEES SEC Release No. 33-7932 requires, among other things, that for certain regulatory filings made after February 15, 2002, mutual fund registrants must disclose potential conflicts of interest involving trustees that could affect their independence. These new requirements require disclosure by each independent Trustee, or their immediate family members, of any direct or indirect interests or material interests, which exceed $60,000, during the two most recently completed calendar years, or which could impact on their independence. Each of the following independent trustees has agreed to provide the following disclosures in accordance with the referenced release. They each maintain that the existence of these facts or circumstances have not, or do not, in any manner, affect their ability to serve as impartial and independent trustees. Mr. Fabian served as Executive Vice President of Phoenix Home Life Mutual Insurance Company, now Phoenix Life Insurance Company ("Phoenix"), from 1992-1994 and of Home Life Insurance Company, a predecessor of Phoenix from 1975 to 1992. As a former officer and employee of Phoenix and its predecessor, Mr. Fabian receives retirement payments and other benefits in excess of $60,000 per year. These include fixed monthly retirement payments (subject to cost of living increases) under the Phoenix Home Life Employee Pension Plan, a tax-qualified defined benefit plan; the Home Life Insurance Company Non-Qualified Retirement Plan, a non-qualified supplemental defined benefit plan; and a special severance agreement providing supplemental retirement benefits on a non-qualified basis. The qualified plan is pre-funded by a separate trust, while the other retirement benefits are obligations of Phoenix. These benefits are fully vested and fixed in amount. Mrs. Groark's husband, Tom Groark, is a partner at the law firm of Day, Berry & Howard LLP ("DBH"). During the last two completed calendar years, DBH provided legal services to Duff & Phelps Investment Management Company ("DPIM"), Phoenix Investment Partners, Ltd. ("PXP"), and other Phoenix affiliates, in the aggregate amount of approximately $755,259. DPIM is the investment advisor to the Phoenix-Duff & Phelps Real Estate Series. PXP is the direct or indirect parent of DPIM and of the Fund's other investment advisors and subadvisors that are affiliated with The Phoenix Companies, Inc. The work performed by DBH did not involve the Fund or any of the Fund's investment advisors or subadvisors other than DPIM. Mr. Groark did not work on or have any other involvement with any of these matters and they did not have a material effect on his compensation. Mrs. Groark does not have any interest in DBH. Mr. Grzelecki and Phoenix are co-investors, among several other investors, in Saugatuck Capital Company Limited Partnership IV ("Saugatuck Capital"), a licensed small business investment partnership that was initially capitalized in July 1999. Mr. Grzelecki has also been affiliated with the general partner of Saugatuck Capital, Saugatuck Management IV, LLC ("Saugatuck LLC"), and retains an equity interest in both entities through that relationship. Phoenix and the Phoenix Employee Pension Plan are limited partners of Saugatuck Capital with an aggregate $5 million capital commitment (of which $4.5 million is on behalf of Phoenix and $0.5 million is on behalf of the pension plan). Mr. Grzelecki is a limited partner in Saugatuck Capital with a capital commitment of $750,000. Total capitalization of Saugatuck Capital is $48 million in limited partnership capital commitments and $70 million in financing from the Small Business Administration, in the form of preferred limited partnership interests. The limited partnership interests are passive interests, although they entitle the limited partners to vote for the removal of the general partner. The voting interests held by both Phoenix and the Plan represent less than 5% of the total outstanding voting interests in Saugatuck Capital. All capital 30 commitments will be paid in by February 2011 or sooner. Mr. Grzelecki was one of the five managing members of Saugatuck LLC from July 1999 through July 2000, and remains a non-managing member. As general partner, Saugatuck LLC is entitled to 20% of the profits of Saugatuck Capital upon its dissolution in approximately ten years. Following Mr. Grzelecki's resignation as a managing member of Saugatuck LLC, he retained a 3.1% vested interest in Saugatuck LLC, which represents a 0.622% interest in the profits of Saugatuck Capital at dissolution. Both Mr. Grzelecki and Mr. Paul M. Chute, Managing Director, Phoenix Investment Counsel, Inc., serve as members of Saugatuck Capital's Advisory Board, a non-governing board of approximately 12 members. Board members receive $3,000 for each of the four meetings held annually. Mr. Shriver is President and Chief Executive Officer of Special Olympics, Inc. ("Special Olympics"), a non-profit organization that sponsors an international program of year-round sports training and athletic competition for more than one million children and adults with mental retardation. Phoenix is a corporate supporter of the Special Olympics. In each of the last two completed calendar years, Phoenix provided printing services to Special Olympics valued at $498,799. BOARD OF TRUSTEES' CONSIDERATION OF ADVISORY AND SUBADVISORY AGREEMENTS The Board of Trustees is ultimately responsible for overseeing the performance of the Fund's investment advisors and subadvisors and determining whether to approve and renew the Fund's investment advisory arrangements. At its meeting on August 28, 2001, the Board approved advisory agreements for the following newly created Series: Phoenix-AIM Mid-Cap Equity Series; Phoenix- Alliance/Bernstein Growth + Value Series; Phoenix-MFS Investors Growth Stock Series; Phoenix-MFS Investors Trust Series; and, the Phoenix-MFS Value Series. At its meeting on November 13, 2001, the Board approved the renewal of all other advisory agreements for the Fund. In each instance, the Board considered the following primary factors: o The nature and quality of the services that have been, and will be, provided to each Series as described in the advisory and subadvisory agreements and in the other materials provided by each of the advisors and subadvisors to the Fund. These materials also included, without limitation, a description of the qualifications, including credentials and experience of officers of each advisor/subadvisor and a brief description of how each advisors/subadvisor seeks to attract and retain high caliber professionals. The Trustees were also presented with information comparing Series' performance against appropriate benchmarks; the amount of brokerage commissions paid and allocated to affiliated brokers (together with the use of soft dollars by each applicable advisor/subadvisor); each advisor/subadvisor's record of compliance with Series' investment restrictions and their own code of ethics; and the nature of any other relevant services. o The fees charged by each advisor and subadvisor together with a comparison of such fees against an appropriate benchmark. This cost analysis also included materials relating to indirect costs and other fees collected by these entities or their affiliates based on their association with the Fund. o The profitability attributable to serving as an advisor/subadvisor to the Fund. The responses to this item also addressed how offering the Fund as an investment option for their variable life insurance and annuity contracts financially impacts Phoenix and affiliated insurance companies. o Economies of scale that could be used to reduce expenses were also considered. Specifically, consideration was given to the scope of expense reimbursements offered by advisors and the availability of any fee breakpoints. Reports from each advisor and subadvisor that addressed each of these specific factors were supplied to Board members in advance of the annual contract review meeting and reviewed with them at that meeting. The Board did not identify any particular information that was all-important or controlling. Based on the Board's deliberation and its evaluation of the information described above, the Board, including all of the Independent Trustees, unanimously approved the agreements and concluded that the compensation under the agreements is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment. DESCRIPTION OF SHARES The Declaration of Trust authorizes the issuance of an unlimited number of shares of beneficial interest of each series, each of which represents an equal proportionate interest in that series. Each share upon liquidation entitles a shareholder to a pro rata share in the net assets of that series. Shareholders have no preemptive rights. The Declaration of Trust provides that the Trustees of the Fund may create additional series of shares or separate classes of portfolios without shareholder approval. Share certificates representing the shares will not be issued. VOTING Each share of each series entitles the shareholder of record to one vote. Where a matter pertains solely to one or more series, only the shareholders of such series will be entitled to vote. Under the Declaration of Trust and Massachusetts business trust law, the Fund is not required to hold annual shareholder meetings. It is not anticipated that the Fund will hold shareholder meetings unless required by law, although special meetings may be called for a specific series, or for the Fund as a whole, for the election or removal of a Trustee, changing 31 a fundamental policy, or approving a new or amended advisory contract or subadvisory agreement. In addition, the Declaration of Trust provides that the holders of not less than two-thirds of the outstanding voting shares may remove a person serving as trustee either by written instrument or at a meeting held for that purpose. The Trustees are required to call a meeting for the purpose of considering the removal of a person serving as a Trustee, if requested in writing by the holders of not less than 10% of the outstanding shares of the Fund. In accordance with current laws, it is anticipated that an insurance company issuing a variable contract that participates in the Fund will request voting instructions from the variable contract owners and will vote the shares in the separate account in proportion to the voting instructions received. The Fund's shares do not have cumulative voting rights. One or more of the separate accounts of the Phoenix family of insurance companies offering variable insurance and annuity products own the shares of both of the series. The following table shows the percentage ownership of each series held by each separate or general account as of August 1, 2002.
- ------------------------------------------------------------------------------------------------------------------------------------ Phoenix Life Phoenix Life Phoenix Life & Annuity Variable Variable PHL Variable PHL Variable Variable Accumulation Universal Accumulation Universal Life Universal Series Account Life Account Account Account Life Account - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Aberdeen International 33.3% 41.7% 25.0% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Aberdeen New Asia 29.2% 28.0% 42.5% 0.0% 0.3% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-AIM Mid-Cap Equity 12.3% 68.6% 19.2% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Alliance/Bernstein Growth + Value 5.2% 58.5% 36.3% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Deutsche Dow 30 19.8% 33.5% 46.4% 0.0% 0.3% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Deutsche Nasdaq-100 Index(R) 24.5% 37.6% 37.5% 0.0% 0.4% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Duff & Phelps Real Estate Securities 23.1% 29.6% 47.2% 0.0% 0.1% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Capital Growth 29.9% 49.0% 21.1% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Small & Mid-Cap Growth 20.4% 81.2% -1.7% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Federated U.S. Government Bond 15.3% 36.0% 48.6% 0.0% 0.1% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Goodwin Money Market 6.1% 52.7% 41.1% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Goodwin Multi-Sector Fixed Income 35.2% 29.4% 34.2% 0.0% 1.2% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Hollister Value Equity 24.7% 36.9% 38.3% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-J.P. Morgan Research Enhanced Index 28.1% 23.9% 47.9% 0.0% 0.1% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Janus Flexible Income 34.7% 27.2% 38.0% 0.0% 0.1% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Janus Growth 99.5% 0.5% 0.0% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Kayne Large-Cap Core 14.8% 20.4% 63.7% 0.0% 1.1% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Kayne Small-Cap Quality Value 22.3% 23.3% 53.8% 0.0% 0.7% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Lazard International Equity Select 0.0% 0.0% 0.0% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Lazard Small-Cap Value 0.0% 0.0% 0.0% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Lazard U.S. Multi-Cap 0.0% 0.0% 0.0% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Lord Abbett Bond-Debenture 0.0% 0.0% 0.0% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Lord Abbett Large-Cap Value 0.0% 0.0% 0.0% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Lord Abbett Mid-Cap Value 0.0% 0.0% 0.0% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-MFS Investors Growth Stock 18.6% 63.4% 18.0% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-MFS Investors Trust 8.5% 77.9% 13.6% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-MFS Value 19.2% 37.2% 43.6% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Oakhurst Growth & Income 21.2% 23.9% 54.9% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Oakhurst Strategic Allocation 17.1% 57.7% 25.2% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Sanford Bernstein Global Value 9.3% 64.1% 26.6% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Sanford Bernstein Mid-Cap Value 27.5% 27.1% 45.1% 0.0% 0.2% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Sanford Bernstein Small-Cap Value Equity 19.1% 27.5% 52.2% 0.0% 1.1% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Seneca Mid-Cap Growth 26.1% 25.9% 47.2% 0.0% 0.7% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Seneca Strategic Theme 24.5% 32.5% 42.8% 0.0% 0.2% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-State Street Research Small-Cap Growth 0.0% 0.0% 0.0% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Van Kampen Focus Equity 0.0% 0.0% 0.0% 0.0% 0.0% - ------------------------------------------------------------------------------------------------------------------------------------
32 PHL Variable Insurance Company and Phoenix Life and Annuity Company are indirect, wholly owned subsidiaries of The Phoenix Companies, Inc. No shares are held by any advisor or subadvisor of the Fund. THE INVESTMENT ADVISORS AND SUBADVISORS - -------------------------------------------------------------------------------- THE INVESTMENT ADVISORS The Fund has entered into Investment Advisory Agreements (each an "Agreement" and together the "Agreements") with Phoenix Investment Counsel, Inc., Phoenix Variable Advisors, Inc., Duff & Phelps Investment Management Co., and Phoenix-Aberdeen International Advisors, LLC (each an "advisor" and together the "advisors") to serve as investment advisors to the various series of the Fund, as described below. The Agreements provide that each advisor shall furnish continuously, at its own expense, an investment program for each of the series, subject at all times to the supervision of the Trustees. The Agreements remain in effect for two years following the initial effective date with respect to a series, and continue in force from year to year thereafter for all series, provided that, with respect to each series, the applicable agreement must be approved at least annually by the Trustees or by vote of a majority of the outstanding voting securities of that series (as that term is defined in the 1940 Act). In addition, and in either event, the terms of the Agreements and any renewal thereof must be approved by the vote of a majority of Trustees who are not parties to the Agreement or interested persons (as that term is defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such approval. The agreements will terminate automatically if assigned and may be terminated at any time, without payment of any penalty, either by the Fund or by the advisors, on sixty (60) days written notice. The Agreements provide that the advisors shall not be liable to the Fund or to any shareholder of the Fund for any error of judgment or mistake of law or for any loss suffered by the Fund or by any shareholder of the Fund in connection with the matters to which the Agreements relate, except a loss resulting from willful misfeasance, bad faith, gross negligence or reckless disregard on the part of the advisors in the performance of its duties thereunder. PHOENIX INVESTMENT COUNSEL, INC. Phoenix Investment Counsel, Inc. ("PIC") is the investment advisor to the following series of the Fund: o Phoenix-Aberdeen International Series o Phoenix-Engemann Capital Growth Series o Phoenix-Engemann Small & Mid-Cap Growth Series o Phoenix-Goodwin Money Market Series o Phoenix-Goodwin Multi-Sector Fixed Income Series o Phoenix-Hollister Value Equity Series o Phoenix-Kayne Large-Cap Core Series o Phoenix-Kayne Small-Cap Quality Value Series o Phoenix-Oakhurst Growth and Income Series o Phoenix-Oakhurst Strategic Allocation Series o Phoenix-Seneca Mid-Cap Growth Series o Phoenix-Seneca Strategic Theme Series The Fund pays PIC, as full compensation for the services and facilities furnished to the Fund under the Agreement; a fee based on an annual percentage of the average daily net assets of each of these series, as described in the tables below. There can be no assurance that a series will reach a net asset level high enough to realize a reduction in the rate of the advisory fee. - --------------------------------------------------------------- RATE FOR RATE FOR RATE FOR FIRST NEXT EXCESS OVER SERIES $250,000,000 $250,000,000 $500,000,000 - --------------------------------------------------------------- Phoenix-Aberdeen International .75% .70% .65% - --------------------------------------------------------------- Phoenix-Engemann Capital Growth .70% .65% .60% - --------------------------------------------------------------- Phoenix-Goodwin Money Market .40% .35% .30% - --------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income .50% .45% .40% - --------------------------------------------------------------- Phoenix-Hollister Value Equity .70% .65% .60% - --------------------------------------------------------------- Phoenix-Oakhurst Growth and Income .70% .65% .60% - --------------------------------------------------------------- Phoenix-Oakhurst Strategic Allocation .60% .55% .50% - --------------------------------------------------------------- Phoenix-Seneca Strategic Theme .75% .70% .65% - --------------------------------------------------------------- - --------------------------------------------------------------- SERIES RATE - --------------------------------------------------------------- Phoenix-Engemann Small & Mid-Cap Growth .90% - --------------------------------------------------------------- Phoenix-Kayne Large-Cap Core .70% - --------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value .90% - --------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth .80% - --------------------------------------------------------------- PIC has been an investment advisor for over sixty years, and is an investment advisor and subadvisor to other mutual funds and institutional clients. PIC also is a subadvisor to the Phoenix-Aberdeen New Asia Series. Phoenix Equity Planning Corporation ("PEPCO") owns all of the outstanding stock of PIC, a subsidiary of Phoenix Investment Partners, Ltd. ("PXP"). PXP is an indirect, wholly-owned subsidiary of The Phoenix Companies, Inc. PEPCO also performs bookkeeping, pricing and administrative services for the Fund. PIC was originally organized in 1932 as John P. Chase, Inc. As of December 31, 2001, PIC had approximately $23.8 billion in assets under management. PIC's offices are located at 56 Prospect Street, Hartford, Connecticut 06115. PHOENIX VARIABLE ADVISORS, INC. Phoenix Variable Advisors, Inc. ("PVA") is the investment advisor to the following series of the Fund: o Phoenix-AIM Mid-Cap Equity Series o Phoenix-Alliance/Bernstein Growth + Value Series o Phoenix-Deutsche Dow 30 Series 33 o Phoenix-Deutsche NASDAQ-100 Index(R) Series o Phoenix-Federated U.S. Government Bond Series o Phoenix-J.P. Morgan Research Enhanced Index Series o Phoenix-Janus Flexible Income Series o Phoenix-Janus Growth Series o Phoenix-Lazard International Equity Select Series o Phoenix-Lazard Small-Cap Value Series o Phoenix-Lazard U.S. Multi-Cap Series o Phoenix-Lord Abbett Bond-Debenture Series o Phoenix-Lord Abbett Large-Cap Value Series o Phoenix-Lord Abbett Mid-Cap Value Series o Phoenix-MFS Investors Growth Stock Series o Phoenix-MFS Investors Trust Series o Phoenix-MFS Value Series o Phoenix-Sanford Bernstein Global Value Series o Phoenix-Sanford Bernstein Mid-Cap Value Series o Phoenix-Sanford Bernstein Small-Cap Value Series o Phoenix-State Street Research Small-Cap Growth Series o Phoenix-Van Kampen Focus Equity Series The Fund pays PVA, as full compensation for the services and facilities furnished to the Fund under the Agreement; a fee based on an annual percentage of the average daily net assets of each of these series, as described in the table below. - -------------------------------------------------------------- SERIES RATE - -------------------------------------------------------------- Phoenix-AIM Mid-Cap Equity .85% - -------------------------------------------------------------- Phoenix-Alliance/Bernstein Growth + Value .85% - -------------------------------------------------------------- Phoenix-Deutsche Dow 30 .35% - -------------------------------------------------------------- Phoenix-Deutsche Nasdaq-100 Index(R) .35% - -------------------------------------------------------------- Phoenix-Federated U.S. Government Bond .60% - -------------------------------------------------------------- Phoenix-J.P. Morgan Research Enhanced Index .45% - -------------------------------------------------------------- Phoenix-Janus Flexible Income .80% - -------------------------------------------------------------- Phoenix-Janus Growth .85% - -------------------------------------------------------------- Phoenix-Lazard International Equity Select .90% - -------------------------------------------------------------- Phoenix-Lazard Small-Cap Value .90% - -------------------------------------------------------------- Phoenix-Lazard U.S. Multi-Cap .80% - -------------------------------------------------------------- Phoenix-Lord Abbett Bond-Debenture .75% - -------------------------------------------------------------- Phoenix-Lord Abbett Large-Cap Value .75% - -------------------------------------------------------------- Phoenix-Lord Abbett Mid-Cap Value .85% - -------------------------------------------------------------- Phoenix-MFS Investors Growth Stock .75% - -------------------------------------------------------------- Phoenix-MFS Investors Trust .75% - -------------------------------------------------------------- Phoenix-MFS Value .75% - -------------------------------------------------------------- Phoenix-Sanford Bernstein Global Value .90% - -------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value 1.05% - -------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value 1.05% - -------------------------------------------------------------- Phoenix-State Street Research Small-Cap Growth .85% - -------------------------------------------------------------- Phoenix-Van Kampen Focus Equity .85% - -------------------------------------------------------------- PVA began operations as an investment advisor in 1999, the same year it began serving as an investment advisor to the Fund. PVA, an indirect, wholly owned subsidiary of Phoenix, was established to actively monitor and manage subadvisor performance for those series of the Fund where the subadvisor is not affiliated with Phoenix. This remains PVA's sole business activity. As of December 31, 2001, PVA has approximately $365.6 million in assets under management. PVA's offices are located at One American Row, Hartford, Connecticut 06102. DUFF & PHELPS INVESTMENT MANAGEMENT CO. Duff & Phelps Investment Management Co. ("DPIM") is the investment advisor to the Phoenix-Duff & Phelps Real Estate Securities Series. The Fund pays DPIM, as full compensation for the services and facilities furnished to the Fund under the Agreement; a fee based on an annual percentage of the average daily net assets of the series, as described in the table below. There can be no assurance that a series will reach a net asset level high enough to realize a reduction in the rate of the advisory fee. - ----------------------------------------------------------------------- RATE FOR RATE FOR RATE FOR FIRST NEXT EXCESS OVER SERIES $1,000,000,000 $1,000,000,000 $2,000,000,000 - ----------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate .75% .70% .65% Securities - ----------------------------------------------------------------------- DPIM also serves as investment advisor for other funds. DPIM is a subsidiary of PXP, and an indirect, wholly owned subsidiary of The Phoenix Companies, Inc. As of December 31, 2001, DPIM had approximately $6.9 billion in assets under management. DPIM's offices are located at 55 East Monroe Street, Suite 3600, Chicago, Illinois 60603. PHOENIX-ABERDEEN INTERNATIONAL ADVISORS, LLC Phoenix-Aberdeen International Advisors, LLC ("PAIA") is the investment advisor to the Phoenix-Aberdeen New Asia Series. The Fund pays PAIA, as full compensation for the services and facilities furnished to the Fund under the Agreement; a fee based on an annual percentage of the average daily net assets of the series, as described in the table below. - -------------------------------------------------------------- SERIES RATE - -------------------------------------------------------------- Phoenix-Aberdeen New Asia 1.00% - -------------------------------------------------------------- PAIA also serves as an investment advisor to other funds. PAIA is a Delaware limited liability company formed in 1996 and jointly owned and managed by PM Holdings, Inc., a wholly-owned subsidiary of Phoenix, and Aberdeen Fund Managers, Inc., a wholly-owned subsidiary of Aberdeen Asset Management PLC. As of December 31, 2001, PAIA had approximately $42.9 million in assets under management. PAIA's offices are located at One American Row, Hartford, Connecticut 06115. EXPENSE REIMBURSEMENT ARRANGEMENTS The advisors have agreed to reimburse the Fund for certain operating expenses for all series. For the year ended December 31, 2002, the portion of these expenses to be paid by each series is listed in the following table. All expense reimbursement arrangements may be discontinued at any time thereafter. 34 - --------------------------------------------------------------- MAXIMUM OPERATING SERIES EXPENSE - --------------------------------------------------------------- Phoenix-Aberdeen International .40% - --------------------------------------------------------------- Phoenix-Aberdeen New Asia .35% - --------------------------------------------------------------- Phoenix-AIM Mid-Cap Equity .25% - --------------------------------------------------------------- Phoenix-Alliance/Bernstein Growth + Value .25% - --------------------------------------------------------------- Phoenix-Deutsche Dow 30 .25% - --------------------------------------------------------------- Phoenix-Deutsche Nasdaq-100 Index .25% - --------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate .35% Securities - --------------------------------------------------------------- Phoenix-Engemann Capital Growth .25% - --------------------------------------------------------------- Phoenix-Engemann Small & Mid-Cap Growth .35% - --------------------------------------------------------------- Phoenix-Federated U.S. Government Bond .35% - --------------------------------------------------------------- Phoenix-Goodwin Money Market .25% - --------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income .25% - --------------------------------------------------------------- Phoenix-Hollister Value Equity .25% - --------------------------------------------------------------- Phoenix-J.P. Morgan Research Enhanced Index .20% - --------------------------------------------------------------- Phoenix-Janus Flexible Income .25% - --------------------------------------------------------------- Phoenix-Janus Growth .25% - --------------------------------------------------------------- Phoenix-Kayne Large-Cap Core .15% - --------------------------------------------------------------- Phoenix-Kayne Small-Cap Value .15% - --------------------------------------------------------------- Phoenix-Lazard International Equity Select .15% - --------------------------------------------------------------- Phoenix-Lazard Small-Cap Value .15% - --------------------------------------------------------------- Phoenix-Lazard U.S. Multi-Cap .15% - --------------------------------------------------------------- Phoenix-Lord Abbett Bond-Debenture .15% - --------------------------------------------------------------- Phoenix-Lord Abbett Large-Cap Value .15% - --------------------------------------------------------------- Phoenix-Lord Abbett Mid-Cap Value .15% - --------------------------------------------------------------- Phoenix-MFS Investors Growth Stock .25% - --------------------------------------------------------------- Phoenix-MFS Investors Trust .25% - --------------------------------------------------------------- Phoenix-MFS Value .25% - --------------------------------------------------------------- Phoenix-Oakhurst Growth & Income .25% - --------------------------------------------------------------- Phoenix-Oakhurst Strategic Allocation .25% - --------------------------------------------------------------- Phoenix-Sanford Bernstein Global Value .25% - --------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value .25% - --------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value .25% - --------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth .35% - --------------------------------------------------------------- Phoenix-Seneca Strategic Theme .35% - --------------------------------------------------------------- Phoenix-State Street Research Small-Cap .15% Growth - --------------------------------------------------------------- Phoenix-Van Kampen Focus Equity .25% - --------------------------------------------------------------- The Agreements also provide that the advisors will reimburse the Fund for the amount, if any, by which the total operating expenses (including the advisor's compensation, but excluding interest, taxes, brokerage fees and commissions and extraordinary expenses) for any fiscal year exceed the level of expenses which the Fund is permitted to bear under the most restrictive expense limitation imposed on open-end investment companies by any state in which shares of such series are then qualified. The Agreements also provide that all costs and expenses not specifically enumerated, as payable by the advisors shall be paid by the Fund (or, in certain cases, Phoenix). To the extent that any expenses are paid by the Fund, they will be paid by the series incurring them or, in the case of general expenses, may be charged among the series in relation to the benefits received by the shareholders, as determined by the financial agent under the supervision of the Board of Trustees. Such expenses shall include, but shall not be limited to, all expenses (other than those specifically referred to as being borne by the advisors (or, in certain cases, Phoenix)) incurred in the operation of the Fund and any offering of its shares, including, among others, interest, taxes, brokerage fees and commissions, fees of Trustees, expenses of Trustees' and shareholders' meetings including the cost of printing and mailing proxies, expenses of insurance premiums for fidelity and other coverage, expenses of repurchase and redemption of shares, certain expenses of issue and sale of shares, association membership dues, charges of custodians, transfer agents, dividend disbursing agents and financial agents, bookkeeping, auditing and legal expenses. The Fund (or, in certain cases, Phoenix) also will pay the fees and bear the expense of registering and maintaining the registration of the Fund and its shares with the SEC and the expense of preparing and mailing prospectuses and reports to shareholders. The advisors were compensated for the last three calendar years as follows: - -------------------------------------------------------------- COMPENSATION FOR THE YEAR ENDED DECEMBER 31, ADVISORS 2001 2000 1999 - -------------------------------------------------------------- Duff & Phelps $ 279,136 $ 222,041 $ 224,670 Investment Management Company - -------------------------------------------------------------- Phoenix-Aberdeen $ 38,392 $ 48,551 $ 39,395 International Advisors, LLC - -------------------------------------------------------------- Phoenix Investment $15,567,938 $21,356,000 $19,654,852 Counsel, Inc. - -------------------------------------------------------------- Phoenix Variable $ 816,631 $ 626,860 $ 28,115 Advisors, LLC - -------------------------------------------------------------- THE SUBADVISORS PIC, PVA and PAIA employ subadvisors to furnish portfolio management services to the series, subject to Investment Subadvisory Agreements, the terms of which are described below. ABERDEEN FUND MANAGERS, INC. PAIA has engaged Aberdeen Fund Managers, Inc. ("Aberdeen") as a subadvisor to the Phoenix-Aberdeen New Asia Series. PAIA has also engaged PIC to implement domestic cash management for this series. Aberdeen provides all other day-to-day investment operations for the series including international portfolio management. For implementing certain portfolio transactions and providing research and other services to the series, PAIA pays a monthly fee to Aberdeen based on an annual percentage of the average daily net assets of the series as follows: - -------------------------------------------------------------- SERIES RATE - -------------------------------------------------------------- Phoenix-Aberdeen New Asia .40% - -------------------------------------------------------------- PIC has engaged Aberdeen as a subadvisor to the Phoenix-Aberdeen International Series. Aberdeen provides the day-to-day portfolio management for the series. For implementing certain portfolio transactions and providing other services to the series, PIC pays a monthly fee to Aberdeen based on an annual percentage of the average daily net assets of the series as follows: 35 - -------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - -------------------------------------------------------------- .375% On first $250 million ----------------------------------- Phoenix-Aberdeen .350% On next $250 million International ----------------------------------- .325% On excess - -------------------------------------------------------------- Aberdeen may, as needed, use the resources of its parent, Aberdeen Asset Management PLC and its parent's wholly owned subsidiaries for implementing certain portfolio transactions and for providing research services. For implementing certain portfolio transactions, providing research and other services with regard to investments in particular geographic areas, for example, Aberdeen shall engage the services of its affiliates, Aberdeen Fund Managers Ltd. and Aberdeen Asset Management Asia Limited for which such entities shall be paid a fee by Aberdeen. Aberdeen and Aberdeen Asset Management Asia Limited have executed an investment management agreement for the Phoenix-Aberdeen New Asia Series. Aberdeen Asset Management Asia Limited executes Far East portfolio management on behalf of Aberdeen. Aberdeen is a wholly owned subsidiary of Aberdeen Asset Management PLC, and its principal offices are located at 300 SE 2nd Street, Suite 820, Fort Lauderdale, Florida 33304. Aberdeen Asset Management Asia Limited is a direct subsidiary of Aberdeen Asset Management PLC, and its principal offices are located at 21 Church Street, #01-01 Capital Square Two, Singapore 049480. Aberdeen Asset Management PLC was founded in 1983 and through subsidiaries operating from offices in Aberdeen, Scotland; London; Singapore and Fort Lauderdale, Florida, provides investment management services to unit and investment trusts, segregated pension funds and other institutional and private portfolios. As of December 31, 2001, Aberdeen Asset Management PLC, and its advisory subsidiaries, had approximately $53 billion in assets under management. Aberdeen Asset Management PLC's principal offices are located at One Bow Churchyard, Cheapside, London EC4M 9HH. A I M CAPITAL MANAGEMENT, INC. Pursuant to a subadvisory agreement between PVA and AIM Capital Management, Inc. ("AIM"), AIM is the subadvisor and furnishes portfolio management services to the Phoenix-AIM Mid-Cap Equity Series. For the services provided, PVA pays a monthly fee to AIM based on an annual percentage of the average daily net assets of the series as follows: - ------------------------------------------------------------- SERIES RATE - ------------------------------------------------------------- Phoenix-AIM Mid-Cap Equity 0.50% - ------------------------------------------------------------- AIM is an indirect, wholly owned subsidiary of AIM Management Group Inc. AIM Management Group Inc. advises approximately 150 mutual funds and separate accounts which total approximately $158 billion in assets as of December 31, 2001. AIM's principal offices are located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046. ALLIANCE CAPITAL MANAGEMENT L.P. Pursuant to a subadvisory agreement between PVA and Alliance Capital Management L.P. ("Alliance"), Alliance is the subadvisor and furnishes portfolio management services to the Phoenix-Alliance/Bernstein Growth + Value Series. Alliance will manage the portion of the series' assets invested in value stocks through its Bernstein Investment Research and Management unit (the "Bernstein Unit"). For the services provided through December 31, 2002, PVA pays a monthly fee to Alliance based on an annual percentage of the average daily net assets of the series as follows: - ------------------------------------------------------------- SERIES RATE - ------------------------------------------------------------- Phoenix-Alliance/Bernstein Growth + Value 0.50% - ------------------------------------------------------------- After December 31, 2002, the monthly fee payable to Alliance will be based on an annual percentage of the average daily net assets of the series as indicated in the following table: - ---------------------------------- RATE BREAKPOINT ASSETS - ---------------------------------- 0.90% On first $20 million - ---------------------------------- 0.75% On next $20 million - ---------------------------------- 0.60% On next $20 million - ---------------------------------- 0.40% On next $40 million - ---------------------------------- 0.30% On excess - ---------------------------------- Pursuant to subadvisory agreements between PVA and Alliance, Alliance, through its Bernstein Unit, is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Phoenix-Sanford Bernstein Global Value, Phoenix-Sanford Bernstein Mid-Cap Value and Phoenix-Sanford Bernstein Small-Cap Value Series. For the services provided, PVA pays a monthly fee to Alliance based on an annual percentage of the average daily net assets of the series as follows: - -------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - -------------------------------------------------------------- .65% On first $25 million ------------------------------ .50% On next $25 million Phoenix-Sanford Bernstein ------------------------------ Global Value .45% On next $25 million ------------------------------ .40% On next $100 million ------------------------------ .30% On excess - -------------------------------------------------------------- - -------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - -------------------------------------------------------------- Phoenix-Sanford Bernstein .80% On first $25 million Mid-Cap Value ------------------------------ .60% On excess - -------------------------------------------------------------- - -------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - -------------------------------------------------------------- Phoenix-Sanford Bernstein 1.00%(1) On first $10 million Small-Cap Value ------------------------------ .875% On next $10 million ------------------------------ .75% On excess - -------------------------------------------------------------- (1)The series subadvised by the Bernstein Unit receive a 10% reduction in fees for all or a portion of these series' assets when certain assets of the series exceed $10 million. As a result of this reduction in fees, the current rate for calculating subadvisory fees for the Phoenix-Sanford Bernstein Small Cap Value Series is 0.80% of average daily net assets. 36 Alliance is a leading international investment advisor supervising client accounts with assets as of December 31, 2001 totaling approximately $455 billion. The Bernstein Unit services the former investment research and management business of Sanford C. Bernstein & Co., Inc., a registered investment advisor and broker/dealer acquired by Alliance in October 2000 that managed value-oriented investment portfolios since 1967. Alliance is located at 1345 Avenue of the Americas, New York, New York 10105. DEUTSCHE ASSET MANAGEMENT, INC. Pursuant to a subadvisory agreement between PVA and Deutsche Asset Management, Inc. ("DAMI"), DAMI is the subadvisor and provides portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Phoenix-Deutsche Trust Dow 30 and Phoenix-Deutsche Nasdaq-100 Index(R) Series. For the services provided, PVA pays a monthly fee to DAMI (subject to a $100,000 annual minimum for each series) based on an annual percentage of the average daily net assets of the series as follows: - -------------------------------------------------------------- SERIES RATE - -------------------------------------------------------------- Phoenix-Deutsche Dow 30 .10% - -------------------------------------------------------------- Phoenix-Deutsche Nasdaq-100 Index(R) .10% - -------------------------------------------------------------- DAMI, a Delaware banking corporation, is a wholly owned, indirect subsidiary of Deutsche Bank AG, and has more than 50 years of experience managing retirement assets for the nation's largest corporations and institutions. DAMI formally assumed responsibility for managing the series from Bankers Trust Company on May 1, 2001. No change of actual control or management occurred as a result of this corporate restructuring. As of December 31, 2001, DAMI had $96.4 billion in assets under management globally; and in the U.S., DAMI is responsible for over $96 billion in client assets. DAMI's principal offices are located at 280 Park Avenue, New York, New York 10017. ROGER ENGEMANN & ASSOCIATES, INC. Pursuant to subadvisory agreements between PIC and Engemann with respect to the Phoenix-Engemann Capital Growth and Phoenix-Engemann Small & Mid-Cap Growth Series, Engemann is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to these series. For the services provided, PIC pays a monthly fee to Engemann based on an annual percentage of the average daily net assets of the series as follows: - ----------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - ----------------------------------------------------------------- .10% On first $3 billion Phoenix-Engemann Capital Growth ------------------------------- .30% On excess - ----------------------------------------------------------------- - ----------------------------------------------------------------- SERIES RATE - ----------------------------------------------------------------- Phoenix-Engemann Small & Mid-Cap Growth .45% - ----------------------------------------------------------------- Engemann is a wholly owned subsidiary of Pasadena Capital Corporation, which is a wholly owned subsidiary of PXP. Engemann has been engaged in the investment management business since 1969, and provides investment-counseling services to retirement plans, colleges, corporations, trusts and individuals. Engemann also serves as investment advisor to the Phoenix-Engemann Funds. As of December 31, 2001, Engemann had approximately $5 billion in assets under management. Engemann's principal place of business is located at 600 North Rosemead Blvd., Pasadena, California 91107-2101. FEDERATED INVESTMENT MANAGEMENT COMPANY Pursuant to a subadvisory agreement between PVA and Federated Investment Management Company ("Federated"), Federated is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Phoenix-Federated U.S. Government Bond Series. For the services provided, PVA pays a monthly fee to Federated based on an annual percentage of the average daily net assets of the series as follows: - ----------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - ----------------------------------------------------------------- .30% On first $25 million -------------------------------- Phoenix-Federated U.S. .25% On next $25 million Government Bond -------------------------------- .20% On next $50 million -------------------------------- negotiable On excess - ----------------------------------------------------------------- Federated, a Delaware business trust, is a wholly-owned subsidiary of Federated Investors, Inc. Federated and other subsidiaries of Federated Investors Inc. advise approximately 105 mutual funds and separate accounts which total approximately $179.7 billion in assets as of December 31, 2001. Federated's principal offices are located at 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222. J.P. MORGAN INVESTMENT MANAGEMENT INC. Pursuant to a subadvisory agreement between the Fund, PVA and J.P. Morgan Investment Management Inc. ("J.P. Morgan"), J.P. Morgan is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Phoenix-J.P. Morgan Research Enhanced Index Series. For the services provided, PVA pays a monthly fee to J.P. Morgan based on an annual percentage of the average daily net assets of the series as follows: - ----------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - ----------------------------------------------------------------- Phoenix-J.P. Morgan Research .25% On first $100 million Enhanced Index --------------------------------- .20% On excess - ----------------------------------------------------------------- J.P. Morgan, founded in 1984, is a wholly-owned subsidiary of J.P. Morgan Chase & Co. J.P. Morgan presently serves as an investment manager for corporate, public and union employee benefit funds, foundations, endowments, insurance companies, government agencies and the accounts of other institutional investors. As of December 31, 2001, J.P. Morgan and it affiliates had over 37 $600 billion in assets under management. J.P. Morgan's principal place of business is located at 522 Fifth Avenue, New York, New York 10036. JANUS CAPITAL MANAGEMENT LLC (FORMERLY JANUS CAPITAL CORPORATION) Pursuant to a subadvisory agreement between PVA and Janus Capital Management LLC ("Janus"), Janus is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Phoenix-Janus Flexible Income and Phoenix-Janus Growth Series. For the services provided, PVA pays a monthly fee to Janus based on an annual percentage of the average daily net assets of each of the series (calculated separately, not in the aggregate) as follows: - ----------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - ----------------------------------------------------------------- .55% On first $100 million Phoenix-Janus Flexible Income --------------------------------- Phoenix-Janus Growth .50% On next $400 million --------------------------------- .45% On excess - ----------------------------------------------------------------- Janus began serving as an investment advisor to an investment company in 1970 and currently serves as investment advisor to all of the Janus retail funds, acts as subadvisor for a number of private label mutual funds and provides separate account advisory services for institutional accounts. Stilwell Financial, Inc. ("Stilwell"), through its wholly owned subsidiary Janus Capital Management LLC, owns approximately 92% of the outstanding membership interests stock of Janus. Stilwell is a publicly traded holding company with principal operations in financial asset management businesses. As of December 31, 2001, Janus had approximately $182.5 billion under management. Janus is located at 100 Fillmore Street, Denver, Colorado 80206. KAYNE ANDERSON RUDNICK INVESTMENT MANAGEMENT, LLC Pursuant to a subadvisory agreement between PIC and Kayne Anderson Rudnick Investment Management, LLC ("Kayne"), Kayne is the subadvisor and furnishes portfolio management services to the Phoenix-Kayne Large-Cap Core and Phoenix-Kayne Small-Cap Quality Value Series. For the services provided, PIC pays a monthly fee to Kayne based on an annual percentage of the combined average daily net assets of both of the series as follows: - ----------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - ----------------------------------------------------------------- .30% On first $800 million Phoenix-Kayne Large-Cap Core -------------------------------- .25% On excess - ----------------------------------------------------------------- - ----------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - ----------------------------------------------------------------- .50% On first $200 million Phoenix-Kayne Small-Cap Quality Value -------------------------------- .45% On excess - ----------------------------------------------------------------- Kayne has been engaged in the investment management business since 1984 and provides investment services to retirement plans, corporations, foundations, endowments, insurance companies, and the accounts of other institutional and private investors. As of March 31, 2002, Kayne had approximately $9.0 billion in assets under management. Kayne's principal place of business is located at 1800 Avenue of the Stars, Second Floor, Los Angeles, California 90067. LAZARD ASSET MANAGEMENT Pursuant to a subadvisory agreement between PVA and Lazard Asset Management ("Lazard"), Lazard is the subadvisor and furnishes portfolio management services to the Phoenix-Lazard International Equity Select, Phoenix-Lazard Small-Cap Value and Phoenix-Lazard U.S. Multi-Cap Series. For the services provided, PVA pays a monthly fee to Lazard based on an annual percentage of the combined average daily net assets of each of the series as follows: - ----------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - ----------------------------------------------------------------- Phoenix-Lazard International .45% On first $500 million Equity Select --------------------------------- .40% On excess - ----------------------------------------------------------------- - ----------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - ----------------------------------------------------------------- Phoenix-Lazard Small-Cap Value .55% On first $250 million --------------------------------- .50% On next $250 million - ----------------------------------------------------------------- .45% On excess - ----------------------------------------------------------------- - ----------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - ----------------------------------------------------------------- .38% On first $250 million Phoenix-Lazard U.S. Multi-Cap --------------------------------- .35% On excess - ----------------------------------------------------------------- Lazard is a division of Lazard Freres & Co., LLC, a pre-eminent global investment bank with over 150 years of experience. The New York based asset management division manages investments for corporations, endowments, public and private pension funds, individuals and mutual funds, with $65 billion in assets under management as of March 31, 2002. LORD, ABBETT & CO. LLC Pursuant to a subadvisory agreement between PVA and Lord, Abbett & Co. LLC ("Lord Abbett"), Lord Abbett is the subadvisor and furnishes portfolio management services to the Phoenix-Lord Abbett Bond-Debenture, Phoenix-Lord Abbett Large-Cap Value and Phoenix-Lord Abbett Mid-Cap Value Series. For the services provided, PIC pays a monthly fee to Lord Abbett based on an annual percentage of the combined average daily net assets of both of the series as follows: - ----------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - ----------------------------------------------------------------- .35% On first $250 million Phoenix-Lord Abbett --------------------------------- Bond-Debenture .30% On next $750 million --------------------------------- .25% On excess - ----------------------------------------------------------------- - ----------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - ----------------------------------------------------------------- .35% On first $600 million Phoenix-Lord Abbett --------------------------------- Large-Cap Value .30% On next $600 million --------------------------------- .25% On excess - ----------------------------------------------------------------- 38 - ----------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - ----------------------------------------------------------------- .45% On first $200 million* Phoenix-Lord Abbett Mid-Cap --------------------------------- Value .40% On next $300 million --------------------------------- .375% On excess - ----------------------------------------------------------------- * The subadvisor has voluntarily agreed to waive .05% of the subadvisory fee on the first $200 million for the first 18 months. Founded in 1929, Lord Abbett manages one of the nation's oldest mutual fund complexes with approximately $46 billion in more than 40 mutual fund portfolios and other advisory accounts, as of March 31, 2002. Lord Abbett is located at 90 Hudson Street, Jersey City, NJ 07302. MFS INVESTMENT MANAGEMENT Pursuant to a subadvisory agreement between PVA and Massachusetts Financial Services Company, Inc., doing business as MFS Investment Management ("MFS"), MFS is the subadvisor and furnishes portfolio management services to the Phoenix-MFS Investors Growth Stock Series, Phoenix-MFS Investors Trust Series, and Phoenix-MFS Value Series. For the services provided, PVA pays a monthly fee to MFS based on an annual percentage of the combined average daily net assets of all three of the series as follows: - ----------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - ----------------------------------------------------------------- .375% On first $500 million Phoenix-MFS Investors Growth --------------------------------- Stock .35% On next $400 million Phoenix-MFS Investors Trust --------------------------------- Phoenix-MFS Value .325% On next $600 million --------------------------------- .25% On excess - ----------------------------------------------------------------- MFS and its predecessor organizations have a history of money management dating from 1924 and the founding of the first mutual fund. Net assets under the management of the MFS organization were approximately $137 billion as of December 31, 2000. MFS is located at 500 Boylston Street, Boston, Massachusetts 02116. Massachusetts Financial Services Company, Inc. is an indirect subsidiary of Sun Life Assurance Company of Canada. MORGAN STANLEY INVESTMENT MANAGEMENT INC. (DBA, VAN KAMPEN) Pursuant to a subadvisory agreement between PVA and Morgan Stanley Investment Management Inc. ("MSIM"), MSIM is the subadvisor and does business in certain instances (including in its role as subadvisor to the series) using the name "Van Kampen." Van Kampen furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Phoenix-Van Kampen Focus Equity Series. For the services provided, PVA pays a monthly fee to Van Kampen based on an annual percentage of the average daily net assets of the series as follows: - ----------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - ----------------------------------------------------------------- .55% On first $150 million Phoenix-Van Kampen --------------------------------- Focus Equity .45% On next $150 million --------------------------------- .40% On excess - ----------------------------------------------------------------- Van Kampen conducts a worldwide portfolio management business and provides a broad range of portfolio management services to customers in the United States and abroad. Morgan Stanley Dean Witter & Co. is the direct parent of Van Kampen. As of December 31, 2001, Van Kampen, together with its affiliated institutional and retail asset management entities, managed assets of approximately $415.9 billion. Van Kampen's address is 1221 Avenue of the Americas, New York, New York 10020. PHOENIX INVESTMENT COUNSEL, INC. PAIA has engaged PIC as a subadvisor to the Phoenix-Aberdeen New Asia Series to implement domestic cash management for this series. Aberdeen Fund Managers, Inc. provides all other day-to-day investment operations for the series including international portfolio management. For providing research and other domestic advisory services to the series, PAIA pays a monthly fee to PIC based on an annual percentage of the average daily net assets of the series as follows: - -------------------------------------------------------------- SERIES RATE - -------------------------------------------------------------- Phoenix-Aberdeen New Asia .30% - -------------------------------------------------------------- SENECA CAPITAL MANAGEMENT, LLC Pursuant to a subadvisory agreement between the Fund, PIC and Seneca Capital Management, LLC ("Seneca") with respect to the Phoenix-Seneca Mid-Cap Growth Series, and pursuant to a subadvisory agreement between PIC and Seneca with respect to the Phoenix-Seneca Strategic Theme Series, Seneca is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Phoenix-Seneca Mid-Cap Growth and Phoenix-Seneca Strategic Theme Series. For the services provided, PIC pays a monthly fee to Seneca based on an annual percentage of the average daily net assets of the series as follows: - ---------------------------------------------------------------- SERIES RATE - ---------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth .40% - ---------------------------------------------------------------- - ----------------------------------------------------------------- SERIES RATE BREAKPOINT ASSETS - ----------------------------------------------------------------- .100% On first $201 million --------------------------------- .375% On next $799 million Phoenix-Seneca Strategic Theme --------------------------------- .350% On next $1 billion --------------------------------- .325% On excess - ----------------------------------------------------------------- PXP owns a majority interest in Seneca; the balance is owned by certain of its employees, including Gail Seneca, one of the portfolio management team leaders, and the former limited partners of GMG/Seneca Capital Management, LLC. Seneca (including its predecessor, GMG/Seneca Capital Management LP) has been an investment advisor since 1989, managing equity and fixed-income securities portfolios primarily for institutions and individuals. As of December 31, 2001, Seneca had approximately $13.6 billion in assets under management. Seneca's principal offices are located at 909 Montgomery St., San Francisco, California 94133. 39 STATE STREET RESEARCH & MANAGEMENT COMPANY Pursuant to a subadvisory agreement between PVA and State Street Research & Management Company ("State Street Research"), State Street Research is the subadvisor and furnishes portfolio management services to the Phoenix-State Street Research Small-Cap Growth Series. For the services provided, PIC pays a monthly fee to State Street Research based on an annual percentage of the average daily net assets of the series as follows: - ----------------------------------------------------------- SERIES RATE - ----------------------------------------------------------- Phoenix-State Street Research Small-Cap Growth .45% - ----------------------------------------------------------- State Street Research is a subsidiary of MetLife, Inc. and traces its heritage back to 1924 and the founding of one of America's first mutual funds. As of March 31, 2002, State Street Research together with its affiliate, SSR Realty, managed $50.9 billion in assets, of which $32 billion represented institutional clients, $11.1 billion represented retail mutual funds and high net worth individuals, and $7.8 billion represented subadvisory relationships. State Street Research's offices are located at One Financial Center, Boston, MA 02111. SUBADVISOR COMPENSATION The subadvisors were compensated for the last three calendar years as follows: - ------------------------------------------------------------------ COMPENSATION FOR THE YEAR ENDED DECEMBER 31, SUBADVISORS 2001 2000 1999 - ------------------------------------------------------------------ AIM Capital Management, $2,918 N/A N/A Inc. - ------------------------------------------------------------------ Aberdeen Fund Managers, $757,068 $1,069,776 $1,010,212 Inc. - ------------------------------------------------------------------ Alliance Capital $354,162 $24,408 N/A Management, L.P. - ------------------------------------------------------------------ Deutsche Asset Management, Inc. $187,781 $4,913 $78 - ------------------------------------------------------------------ Roger Engemann & Associates, Inc. $1,028,104 $1,675,958 $1,362,941 - ------------------------------------------------------------------ Federated Investment Management Company $44,478 $22,647 $650 - ------------------------------------------------------------------ J.P. Morgan Investment Management, Inc. $263,608 $306,609 $261,940 - ------------------------------------------------------------------ Janus Capital Management, LLC $589,841 $315,667 $1,880 - ------------------------------------------------------------------ MFS Investment Management $6,747 N/A N/A - ------------------------------------------------------------------ Phoenix Investment Counsel, Inc. $38,392 $48,551 $39,394 - ------------------------------------------------------------------ Seneca Capital Management, LLC $397,634 $373,540 $44,468 - ------------------------------------------------------------------ Van Kampen $44,273 $34,047 $1,063 - ------------------------------------------------------------------ CUSTODIAN - -------------------------------------------------------------------------------- Custodians under the terms of a custodian agreement hold the securities and cash of the series. The custodians are: [diamond] JP Morgan Chase Bank 270 Park Avenue New York, NY 10017-2070 [diamond] Brown Brothers Harriman & Co 40 Water Street Boston, MA 02109 [diamond] State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 The following tables list the custodians and the series for which they hold cash and securities: - ------------------------------------------------------ CHASE MANHATTAN BANK - ------------------------------------------------------ Phoenix-Engemann Capital Growth Phoenix-Goodwin Money Market Phoenix-Goodwin Multi-Sector Fixed Income Phoenix-Oakhurst Strategic Allocation Phoenix-Seneca Strategic Theme - ------------------------------------------------------ - ------------------------------------------------------ BROWN BROTHERS HARRIMAN & CO. - ------------------------------------------------------ Phoenix-Aberdeen International Phoenix-Aberdeen New Asia Phoenix-Lazard International Equity Select Phoenix-Sanford Bernstein Global Value - ------------------------------------------------------ - ------------------------------------------------------ STATE STREET BANK AND TRUST COMPANY - ------------------------------------------------------ Phoenix-AIM Mid-Cap Equity Phoenix-Alliance/Bernstein Growth + Value Phoenix-Deutsche Dow 30 Phoenix-Deutsche Nasdaq-100 Index(R) Phoenix-Duff & Phelps Real Estate Securities Phoenix-Engemann Small & Mid-Cap Growth Phoenix-Federated U.S. Government Bond Phoenix-Hollister Value Equity Phoenix-J.P. Morgan Research Enhanced Index Phoenix-Janus Flexible Income Phoenix-Janus Growth Phoenix-Kayne Large-Cap Core Phoenix-Kayne Small-Cap Quality Value Phoenix-Lazard Small-Cap Value Phoenix-Lazard U.S. Multi-Cap Phoenix-Lord Abbett Bond-Debenture Phoenix-Lord Abbett Large-Cap Value Phoenix-Lord Abbett Mid-Cap Value Phoenix-MFS Investors Growth Stock Phoenix-MFS Investors Trust Phoenix-MFS Value Phoenix-Oakhurst Growth and Income Phoenix-Sanford Bernstein Mid-Cap Value Phoenix-Sanford Bernstein Small-Cap Value Phoenix-Seneca Mid-Cap Growth Phoenix-State Street Research Small-Cap Growth Phoenix-Van Kampen Focus Equity - ------------------------------------------------------ The Fund permits the custodians to deposit some or all of its securities in central depository systems as allowed by Federal law. The Board of Trustees of the Fund has authorized the use of foreign custodians and foreign central depositories if certain conditions are met. 40 FOREIGN CUSTODIAN - -------------------------------------------------------------------------------- The Fund may use a foreign custodian in connection with its purchases of foreign securities and may maintain cash and cash equivalents in the care of a foreign custodian. The amount of cash or cash equivalents maintained in the care of eligible foreign custodians will be limited to an amount reasonably necessary to effect the Fund's foreign securities transactions. The use of a foreign custodian involves considerations that are not ordinarily associated with domestic custodians. These considerations include the possibility of expropriations, restricted access to books and records of the foreign custodian, inability to recover assets that are lost while under the control of the foreign custodian, and the impact of political, social or diplomatic developments. INDEPENDENT ACCOUNTANTS - -------------------------------------------------------------------------------- PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts 02110, independent accountants for the Fund, audits the Fund's financial statements. The independent accountants also provide other accounting and tax-related services as requested by the Fund from time to time. FINANCIAL AGENT - -------------------------------------------------------------------------------- Under a Financial Agent Agreement, Phoenix Equity Planning Corporation ("PEPCO") acts as financial agent of the Fund and, as such, is responsible for certain administrative functions and the bookkeeping and pricing functions for the Fund. PEPCO is an indirect, wholly owned subsidiary of The Phoenix Companies, Inc. For its services as financial agent, PEPCO receives a fee based on the average of the aggregate daily net asset values of the Fund at the annual rate of $600 per each $1,000,000. PFPC, Inc. has been retained by PEPCO to perform certain administrative and pricing services for the Fund for which PEPCO pays PFPC Inc. a fee. While PEPCO has delegated certain responsibilities to PFPC Inc., PEPCO retains full responsibility for the performance of all duties of the financial agent. CODE OF ETHICS - -------------------------------------------------------------------------------- The Fund and each of its advisors and subadvisors have adopted codes of ethics. Subject to certain limitations and procedures, these codes permit personnel that they cover, including employees of the advisors or subadvisors who regularly have access to information about securities purchased for the Fund, to invest in securities for their own accounts. This could include securities that may be purchased by a series of the Fund. The codes are intended to prevent these personnel from taking inappropriate advantage of their positions and to prevent fraud upon the Fund. BROKERAGE ALLOCATION - -------------------------------------------------------------------------------- In effecting portfolio transactions for the Fund, the advisors and subadvisors adhere to the Fund's policy of seeking best execution and price, determined as described below, except to the extent the Fund is permitted to pay higher brokerage commissions for "brokerage and research services" as defined herein. An advisor or subadvisor may cause a series to pay a broker an amount of commission for effecting a securities transaction in excess of the amount of commission which another broker or dealer would have charged for effecting the transaction, if the advisor or subadvisor determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker. As provided in Section 28(e) of the Securities Exchange Act of 1934, "brokerage and research services" include giving advice as to the value of securities, the advisability of investing in, purchasing or selling securities, and the availability of securities; furnishing analyses and reports concerning issuers, industries, economic factors and trends, portfolio strategy and the performance of accounts; and effecting securities transactions and performing functions incidental thereto (such as clearance and settlement). Brokerage and research services provided by brokers to the series or to the advisors or subadvisors are considered to be in addition to and not in lieu of services required to be performed by the advisors or subadvisors under their advisory contracts, and research services may benefit both the series and other clients of the advisors or subadvisors. Conversely, research services provided by brokers to other clients of the advisors or subadvisors may benefit the series. If the securities in which a particular series of the Fund invests are traded primarily in the over-the-counter market, it is possible the series will deal directly with the dealers who make a market in the securities involved unless better prices and execution are available elsewhere. Such dealers usually act as principals for their own account. On occasion, securities may be purchased directly from the issuer. Bonds and money market instruments are generally traded on a net basis and do not normally involve either brokerage commissions or transfer taxes. The determination of what may constitute best execution and price in the execution of a securities transaction by a broker involves a number of considerations including, without limitation, the overall direct net economic result to the series (involving both price paid or received and any commissions and other costs paid), the efficiency with which the transaction is effected, the ability to effect the transaction at all where a large block is involved, confidentiality, including trade anonymity, the availability of the broker to stand ready to execute possibly difficult transactions in the future and the financial strength and stability of the broker. Such considerations are judgmental and are weighed by the advisors or subadvisors in determining the overall 41 reasonableness of brokerage commissions paid by the Fund. For the fiscal years ended December 31, 1999, 2000 and 2001 brokerage commissions paid by the series on portfolio transactions totaled $4,927,539, $4,757,882 and $3,939,249, respectively. None of the commissions in 1999 were paid to a broker who was an affiliated person of the series or an affiliated person of such a person or, to the knowledge of the series, to a broker an affiliated person of which was an affiliated person of the Fund or the advisor or subadvisor. Of the commissions paid in the year 2000, $486,020 was paid to brokers of affiliated persons of the series as follows: - ----------------------------------------------------------------- SANFORD PXP BERNSTEIN SECURITIES - ----------------------------------------------------------------- Commissions Paid $132,078 $353,942 - ----------------------------------------------------------------- Percent of aggregate commissions 2.78% 7.44% paid to affiliated brokers - ----------------------------------------------------------------- Percent of aggregate dollar amount 2.28% 8.39% of transactions involving commissions effected through affiliated brokers - ----------------------------------------------------------------- Of the commissions paid in the year 2001, $320,009 was paid to brokers of affiliated persons of the series as follows: - ----------------------------------------------------------------- SANFORD PXP BERNSTEIN SECURITIES - ----------------------------------------------------------------- Commissions paid $152,684 $167,401 - ----------------------------------------------------------------- Percent of aggregate commissions 3.88% 4.25% paid to affiliated brokers - ----------------------------------------------------------------- Percent of aggregate dollar amount of transactions involving 1.60% 2.30% commissions effected through affiliated brokers - ----------------------------------------------------------------- Sanford Bernstein is an affiliate of Alliance. PXP Securities is an affiliate of PIC, PAIA, DPIM, Engemann, Seneca and PVA. Total brokerage commissions paid during the fiscal year ended December 31, 2001 included brokerage commissions of $366,499,570 on portfolio transactions aggregating $534,151 executed by brokers who provided research and other statistical and factual information. It may frequently happen that the same security is held in the portfolio of more than one account managed by an advisor ("Managed Account"). Simultaneous transactions are inevitable when several Managed Accounts are managed by the same investment advisor or subadvisor, particularly when the same security is suited for the investment objectives of more than one Managed Account. When two or more series advised by an advisor or subadvisor are simultaneously engaged in the purchase or sale of the same security, the transactions are allocated among the series in a manner equitable to each series. It is recognized that in some cases this system could have a detrimental effect on the price or volume of the security as far as a series is concerned. In other cases, however, it is believed that the ability of the series to participate in volume transactions will produce better executions for the series. It is the opinion of the Board of Trustees of the Fund that the desirability of utilizing the advisors and subadvisors as investment advisors of securities owned by the series outweighs the disadvantages that may be said to exist from simultaneous transactions. The Fund has adopted a policy and procedures governing the execution of aggregated advisory client orders ("bunching procedures") in an attempt to lower commission costs on a per-share and per-dollar basis. According to the bunching procedures, the advisor or subadvisor, as applicable, shall aggregate transactions unless it believes in its sole discretion that such aggregation is inconsistent with its duty to seek best execution (which shall include the duty to seek best price) for the series. No advisory account of the advisor or subadvisor, as applicable, is to be favored over any other account and each account that participates in an aggregated order is expected to participate at the average share price for all transactions of the advisor or subadvisor, as applicable, in that security on a given business day, with all transaction costs shared pro rata based on the series' participation in the transaction. If the aggregated order is filled in its entirety, it shall be allocated among the advisor or subadvisor's accounts, as applicable, in accordance with the allocation order, and if the order is partially filled, it will generally be allocated pro rata based on the allocation order. Notwithstanding the foregoing, the order may be allocated on a basis different from that specified in the allocation order if all accounts of the advisor or subadvisor, as applicable, whose orders are allocated receive fair and equitable treatment. Some of the subadvisors use different allocation procedures for allocating securities of initial public offerings. DETERMINATION OF NET ASSET VALUE - -------------------------------------------------------------------------------- The net asset value per share of each series is determined as of the close of regular trading of the NYSE on days when the NYSE is open for trading. The NYSE will be closed on the following observed national holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Since the Fund does not price securities on weekends or United States national holidays, the net asset value of a series' foreign assets may be significantly affected on days when the investor has no access to the Fund. The net asset value per share of a series is determined by adding the values of all securities and other assets of the series, subtracting liabilities and dividing by the total number of outstanding shares of the series. Assets and liabilities are determined in accordance with generally accepted accounting principles and applicable rules and regulations of the SEC. Equity securities are valued at the last sale price, or if there had been no sale that day, at the last bid price. Debt securities are valued on the basis of broker quotations or valuations provided by a pricing service which utilizes 42 information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities in determining value. Short-term investments having a remaining maturity of 60 days or less are valued at amortized cost that approximates market. All other securities and assets are valued at their fair value as determined in good faith by or under the direction of the Trustees. The assets of the Phoenix-Goodwin Money Market Series are valued on the basis of amortized cost absent extraordinary or unusual market conditions. Under the amortized cost method of valuation, securities are valued at cost on the date of purchase. Thereafter the value of a security is increased or decreased incrementally each day so that at maturity any purchase discount or premium is fully amortized and the value of the security is equal to its principal amount. Due to fluctuations in interest rates, the amortized cost value of the Phoenix-Goodwin Money Market Series securities may at times be more or less than their market value. By using amortized cost valuation, the Phoenix-Goodwin Money Market Series seeks to maintain a constant net asset value of $10.00 per share despite minor shifts in the market value of its portfolio securities. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary exchange for such security by the Trustees or their delegates. Because of the need to obtain prices as of the close of trading on various exchanges throughout the world, the calculation of net asset value may not take place for any series which invests in foreign securities contemporaneously with the determination of the prices of the majority of the portfolio securities of such series. All assets and liabilities initially expressed in foreign currency values will be converted into United States dollar values at the mean between the bid and ask quotations of such currencies against United States dollars as last quoted by any recognized dealer. If an event were to occur after the value of an investment was so established but before the net asset value per share was determined, which was likely to materially change the net asset value, then the instrument would be valued using fair value considerations by the Trustees or their delegates. If at any time a series has investments where market quotations are not readily available, such investments are valued at the fair value thereof as determined in good faith by the Trustees although the actual calculations may be made by persons acting pursuant to the direction of the Trustees. INVESTING IN THE FUND - -------------------------------------------------------------------------------- Shares of the Fund are not available to the public directly. Although shares of the Fund are owned by the Accounts, contract owners and policy owners do have voting rights with respect to those shares, as described in the prospectus under "Shares of Beneficial Interest." You may invest in the Fund by buying a variable accumulation annuity contract or a variable universal life insurance policy from Phoenix, PHL Variable or PLAC and directing the allocation of the net purchase payment(s) to the subaccounts corresponding to the series of the Fund. Phoenix, PHL Variable and PLAC will, in turn, invest payments in shares of the Fund as the investor directs at net asset value next determined with no sales load. SALES CHARGE AND SURRENDER CHARGES The Fund does not assess any sales charge, either when it sells or when it redeems securities. The sales charges, which may be assessed under the contracts or policies, are described in the contract prospectuses, as are other charges. REDEMPTION OF SHARES - -------------------------------------------------------------------------------- The Fund will redeem any shares presented by the shareholder accounts for redemption. The account's policies on when and whether to buy or redeem Fund shares are described in the contract prospectuses. At the discretion of the Trustees, the Fund may, to the extent consistent with state and federal law, make payment for shares of a particular series repurchased or redeemed in whole or in part in securities or other assets of such series taken at current values. Should payment be made in securities, the shareholder accounts may incur brokerage costs in converting such securities to cash. The right of redemption may be suspended or the payment date postponed for more than seven days only for any period during which trading on the NYSE is closed for other than customary weekend and holiday closings, or when trading on the NYSE is restricted, as determined by the SEC, for any period when an emergency (as defined by rules of the SEC) exists, or during any period when the SEC has, by order, permitted such suspension. In case of a suspension of the right of redemption, the shareholders may withdraw requests for redemption of shares prior to the next determination of net asset value after the suspension has been terminated or they will receive payment of the net asset value so determined. The shareholder accounts may receive more or less than was paid for the shares, depending on the net asset value of the shares at the time they are repurchased or redeemed. TAXES - -------------------------------------------------------------------------------- As stated in the prospectus, it will be the policy of the Fund and of each series to comply with those provisions of the Internal Revenue Code of 1986, as amended, ("Code") which relieve investment companies that distribute substantially all of their net income from federal income tax on the amounts distributed. The Fund also intends to comply with pertinent Code provisions in order to avoid imposition of any federal excise tax. Dividends derived from interest and distributions of any realized capital gains 43 are taxable, under Subchapter M, to the Fund's shareholders, which in this case are the accounts. Federal income taxation of separate accounts, life insurance companies, and unit investment trusts are discussed in the contract prospectuses. DISCLAIMER - -------------------------------------------------------------------------------- PHOENIX-DEUTSCHE DOW 30 SERIES "Dow Jones," "Dow Jones Industrial Average(SM)" and "DJIA(SM)" are service marks of Dow Jones & Company, Inc. and have been licensed for use for certain purposes by the Fund. The Phoenix-Deutsche Dow 30 Series, while based on the Dow Jones Industrial Average(SM), is not sponsored, endorsed, sold or promoted by Dow Jones, and Dow Jones makes no representation regarding the advisability of investing in such product(s). This series is not sponsored, endorsed, sold or promoted by Dow Jones. Dow Jones makes no representation or warranty, express or implied, to actual or potential investors in the series or to any member of the public regarding the advisability of investing in securities generally or in this series particularly. Dow Jones' only relationship to the Fund is the licensing of certain trademarks, trade names and service marks of Dow Jones and of the Dow Jones Industrial Average(SM), which is determined, composed and calculated by Dow Jones without regard to the Fund or the series. Dow Jones has no obligation to take the needs of the Fund or the investors in the series into consideration in determining, composing or calculating the Dow Jones Industrial Average(SM). Dow Jones is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of the series to be issued or in the determination or calculation of the equation by which shares of the series may be redeemed. Dow Jones has no obligation or liability in connection with the administration, marketing or trading of the series. DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE DOW JONES INDUSTRIAL AVERAGE(SM) OR ANY DATA INCLUDED THEREIN AND DOW JONES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. DOW JONES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE FUND, INVESTORS IN THE SERIES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE DOW JONES INDUSTRIAL AVERAGE(SM) OR ANY DATA INCLUDED THEREIN. DOW JONES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE DOW JONES INDUSTRIAL AVERAGE(SM) OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW JONES HAVE ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES OR LOSSES, EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN DOW JONES AND THE FUND. PHOENIX-DEUTSCHE NASDAQ-100 INDEX(R) SERIES The Phoenix-Deutsche Nasdaq-100 Index(R) Series is not sponsored, endorsed, sold or promoted by The Nasdaq Stock Market, Inc. (including its affiliates) (Nasdaq, with its affiliates, are referred to as the "Corporations"). The Corporations have not passed on the legality or suitability of, or the accuracy or adequacy of descriptions and disclosures relating to, the series. The Corporations make no representation or warranty, express or implied to the owners of the series or any member of the public regarding the advisability of investing in securities generally or in the series particularly, or the ability of the Nasdaq-100 Index(R) to track general stock market performance. The Corporations' only relationship to The Phoenix Edge Series Fund (Licensee) is in the licensing of the Nasdaq-100(R), Nasdaq-100 Index(R) and Nasdaq(R) trademarks or service marks, and certain trade names of the Corporations and the use of the Nasdaq-100 Index(R) which is determined, composed and calculated by Nasdaq without regard to Licensee or the series. Nasdaq has no obligation to take the needs of the Licensee or the owners of the series into consideration in determining, composing or calculating the Nasdaq-100 Index(R). The Corporations are not responsible for and have not participated in the determination of the timing of, prices of, or quantities of the series to be issued or in the determination or calculation of the equation by which the series is to be converted into cash. The Corporations have no liability in connection with the administration, marketing or trading of the series. THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE SERIES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT 44 SHALL THE CORPORATIONS HAVE ANY LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The financial statements and the notes thereto relating to the Fund and the report of PricewaterhouseCoopers LLP with respect thereto for the fiscal year ended December 31, 2001 are contained in the Fund's annual report and are incorporated herein by reference. The annual and semiannual reports are available by calling Variable Products Operations at 800/541-0171 or writing to Phoenix Variable Products Mail Operations, PO Box 8027, Boston, MA 02266-8027. Phoenix, PHL Variable and PLAC have agreed to send a copy of both the annual report and the semiannual report to shareholders containing the fund's financial statements to every contract owner or policy owner having an interest in the accounts. 45 APPENDIX - -------------------------------------------------------------------------------- DESCRIPTION OF SECURITIES RATINGS MOODY'S INVESTORS SERVICE, INC. CORPORATE AND MUNICIPAL BOND RATINGS: Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa: Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than the Aaa securities. A: Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. Baa: Bonds which are rated Baa are considered as medium-grade obligations, (i.e., they are neither highly protected nor poorly secured). Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Ba: Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well-assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B: Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings. C: Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. Moody's assigns ratings to individual debt securities issued from medium-term note (MTN) programs, in addition to indicating ratings to MTN programs themselves. Notes issued under MTN programs with such indicated ratings are rated at issuance at the rating applicable to all pari passu notes issued under the same program, at the program's relevant indicated rating, provided such notes do not exhibit any of the characteristics listed below. For notes with any of the following characteristics, the rating of the individual note may differ from the indicated rating of the program: 1) Notes containing features which link the cash flow and/or market value to the credit performance of any third party or parties. 2) Notes allowing for negative coupons, or negative principal. 3) Notes containing any provision which could obligate the investor to make any additional payments. Market participants must determine whether any particular note is rated, and if so, at what rating level. Moody's encourages market participants to contact Moody's Ratings Desks directly if they have questions regarding ratings for specific notes issued under a medium-term note program. Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating classified from Aa through Caa. The modifier 1 indicates that the issue ranks in the higher end of its generic rating category; the modifier 2 indicates a midrange ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category. MUNICIPAL SHORT-TERM LOAN RATINGS MIG 1/VMIG 1: This designation denotes superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support or demonstrated broad-based access to the market for refinancing. MIG 2/VMIG 2: This designation denotes strong credit quality. Margins of protection are ample although not so large as in the preceding group. MIG 3/VMIG 3: This designation denotes acceptable credit quality. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established. SG: This designation denotes speculative-grade credit quality. Debt instruments in this category lack margins of protection. 46 CORPORATE SHORT-TERM DEBT RATINGS Moody's short-term debt ratings are opinions of the ability of issuers to repay punctually senior debt obligations which have an original maturity not exceeding one year, unless explicitly noted. Moody's employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers: PRIME-1: Issuers rated Prime-1 (or supporting institutions) have a superior ability for repayment of senior short-term debt obligations. Prime-1 repayment ability will often be evidenced by many of the following characteristics: leading market positions in well-established industries; high rates of return on funds employed; conservative capitalization structure with moderate reliance on debt and ample asset protection; broad margins in earnings coverage of fixed financial charges and high internal cash generation; and well-established access to a range of financial markets and assured sources of alternate liquidity. PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a strong ability for repayment of senior short-term debt obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. PRIME 3: Issuers rated Prime-3 (or supporting institutions) have an acceptable ability for repayment of senior short-term obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require relatively high financial leverage. Adequate alternate liquidity is maintained. NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories. STANDARD & POOR'S CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS LONG-TERM ISSUER CREDIT RATINGS AAA: An obligor rated 'AAA' has EXTREMELY STRONG capacity to meet its financial commitments. 'AAA' is the highest Issuer Credit Rating assigned by Standard & Poor's. AA: An obligor rated 'AA' has VERY STRONG capacity to meet its financial commitments. It differs from the highest rated obligors only in small degree. A: An obligor rated 'A' has STRONG capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligors in higher-rated categories. BBB: An obligor rated 'BBB' has ADEQUATE capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments. Obligors rated 'BB', 'B', 'CCC', and 'CC' are regarded as having significant speculative characteristics. 'BB' indicates the least degree of speculation and 'CC' the highest. While such obligors will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions. BB: An obligor rated 'BB' is LESS VULNERABLE in the near term than other lower-rated obligors. However, it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitments. B: An obligor rated 'B' is MORE VULNERABLE to nonpayment than obligations rated 'BB', but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation. CCC: An obligor rated 'CCC' is CURRENTLY VULNERABLE, and is dependent upon favorable business, financial, and economic conditions to meet its financial commitments. CC: An obligor rated 'CC' is CURRENTLY HIGHLY VULNERABLE. Plus (+) or minus(-) The ratings from 'AA' to 'CCC' may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. C: A subordinated debt or preferred stock obligation rated 'C' is CURRENTLY HIGHLY VULNERABLE to nonpayment. The 'C' rating may be used to cover a situation where a bankruptcy petition has been filed or similar action taken, but payments on this obligation are being continued. A 'C' also will be assigned to a preferred stock issue in arrears on dividends or sinking fund payments, but that is currently paying. R: An obligor rated 'R' is under regulatory supervision owing to its financial condition. During the pendency of the regulatory supervision the regulators may have the power to favor one class of obligations over others or pay some obligations and not others. Please see Standard & Poor's issue credit ratings for a more detailed description of the effects of regulatory supervision on specific issues or classes of obligations. SD AND D: An obligor rated 'SD' (Selective Default) or 'D' has failed to pay one or more of its financial 47 obligations (rated or unrated) when it came due. A 'D' rating is assigned when Standard & Poor's believes that the default will be a general default and that the obligor will fail to pay all or substantially all of its obligations as they come due. An 'SD' rating is assigned when Standard & Poor's believes that the obligor has selectively defaulted on a specific issue or class of obligations but it will continue to meet its payment obligations on other issues or classes of obligations in a timely manner. Please see Standard & Poor's issue credit ratings for a more detailed description of the effects of a default on specific issues or classes of obligations. N.R.: An issuer designated N.R. is not rated. PUBLIC INFORMATION RATINGS Ratings with a 'pi' subscript are based on an analysis of an issuer's published financial information, as well as additional information in the public domain. They do not, however, reflect in-depth meetings with an issuer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. Ratings with a 'pi' subscript are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event occurs that may affect the issuer's credit quality. Outlooks are not provided for ratings with a 'pi' subscript, nor are they subject to potential CreditWatch listings. Ratings with a 'pi' subscript generally are not modified with '+' or '-' designations. However, such designations may be assigned when the issuer's credit rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group. SHORT-TERM RATING DEFINITIONS A-1: A short-term obligation rated 'A-1' is rated in the highest category by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitment on these obligations is extremely strong. A-2: A short-term obligation rated 'A-2' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitment on the obligation is satisfactory. A-3: A short-term obligation rated 'A-3' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. B: A short-term obligation rated 'B' is regarded as having significant speculative characteristics. The obligor currently has the capacity to meet its financial commitment on the obligation; however, it faces major ongoing uncertainties which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. C: A short-term obligation rated 'C' is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. D: A short-term obligation rated 'D' is in payment default. The 'D' rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor's believes that such payments will be made during such grace period. The 'D' rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized. of a similar action if payments on an obligation are jeopardized. 48 ANNUAL REPORT THE PHOENIX EDGE SERIES FUND DECEMBER 31, 2001 TABLE OF CONTENTS PAGE ---- Phoenix-Aberdeen International Series ..................................... 2 Phoenix-Aberdeen New Asia Series .......................................... 9 Phoenix-AIM Mid-Cap Equity Series ......................................... 15 Phoenix-Alliance/Bernstein Growth + Value Series .......................... 20 Phoenix-Deutsche Dow 30 Series ............................................ 26 Phoenix-Deutsche Nasdaq-100 Index(R)Series ................................ 30 Phoenix-Duff & Phelps Real Estate Securities Series ....................... 35 Phoenix-Engemann Capital Growth Series .................................... 40 Phoenix-Engemann Nifty Fifty Series ....................................... 46 Phoenix-Engemann Small & Mid-Cap Growth Series ............................ 51 Phoenix-Federated U.S. Government Bond Series ............................. 57 Phoenix-Goodwin Money Market Series ....................................... 61 Phoenix-Goodwin Multi-Sector Fixed Income Series .......................... 66 Phoenix-Hollister Value Equity Series ..................................... 74 Phoenix-J.P. Morgan Research Enhanced Index Series ........................ 80 Phoenix-Janus Core Equity Series .......................................... 89 Phoenix-Janus Flexible Income Series ...................................... 94 Phoenix-Janus Growth Series ............................................... 99 Phoenix-MFS Investors Growth Stock Series ................................. 103 Phoenix-MFS Investors Trust Series ........................................ 109 Phoenix-MFS Value Series .................................................. 115 Phoenix-Morgan Stanley Focus Equity Series ................................ 120 Phoenix-Oakhurst Balanced Series .......................................... 126 Phoenix-Oakhurst Growth and Income Series ................................. 134 Phoenix-Oakhurst Strategic Allocation Series .............................. 141 Phoenix-Sanford Bernstein Global Value Series ............................. 149 Phoenix-Sanford Bernstein Mid-Cap Value Series ............................ 158 Phoenix-Sanford Bernstein Small-Cap Value Series .......................... 163 Phoenix-Seneca Mid-Cap Growth Series ...................................... 168 Phoenix-Seneca Strategic Theme Series ..................................... 173 Notes to Financial Statements ............................................. 178 Not FDIC Insured No Bank Guarantee May Lose Value PHOENIX-ABERDEEN INTERNATIONAL SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking high total return consistent with reasonable risk by investing primarily in an internationally diversified portfolio of equity securities. The Fund essentially focuses on quality companies with strong management, solid growth prospects and attractive relative valuations. Investors should note that foreign investments pose added risks, such as currency fluctuation, less public disclosure, as well as economic and political risks. INVESTMENT ADVISER'S REPORT For the 12 months ended December 31, 2001, the Fund returned -24.04% compared with a return of -21.21% for its benchmark index, the MSCI EAFE Index(1). International equity markets have continued to perform poorly, during the year under review, with sentiment towards the prospects for the global economy deteriorating significantly in the immediate aftermath of the tragic events of September 11th. However, as the "war against terrorism" has started to unfold in a more positive light for the US and its allies, and after significant cuts in interest rates globally, the equity markets have recovered off their lows following the terrorist attacks, yet are still significantly down over the year. In response to the declining economic environment and the impact of the horrific terrorist attacks in the US, central banks moved quickly to increase liquidity in the financial markets. As a result, US interest rates were reduced to 1.75% in the year under review, while UK base rates fell to 4.0%. In mid-September, widespread global uncertainty also forced the European Central Bank to aggressively reduce its interest rate from 4.25% to 3.25%. Global monetary policy is likely to remain accommodative with interest rates being reduced to emergency levels. The on-going disputes between OPEC member and non-member states (Norway, Russia, Mexico) over production levels for crude oil has seen the price of Brent Crude drop significantly. The drop in the oil price, together with declining consumer and producer prices, has kept inflationary pressures down and has been very supportive in allowing central banks to act so aggressively in easing monetary policy. The European Central Bank (ECB) has clearly been behind the easing curve on interest rates, with real rates still considerably higher than the US, and core inflation falling due to weak demand. The slowness in policy response from the ECB has meant that "Fortress Europe" has not escaped unscathed with the German economy teetering on recession. The lack of policy response has also meant that the Euro has fallen back below 0.90 to the US dollar after rising to 0.9267 in September. The UK appears to be fairing better than most other economies throughout the world with third quarter GDP posting a stronger-than-expected growth rate of 0.6%. It now seems likely that the UK will avoid a recession, despite a weak manufacturing sector that has suffered from the strength of sterling. Core inflation has fallen well below the Bank of England's target rate of 2.5%. In Japan, the economic gloom has considerably worsened since September 11th. Industrial production fell by 12.7% year-on-year and 4.3% quarter-on-quarter in the third quarter due not only to a drop in exports, but also to a decrease in domestic orders. The unemployment rate took a dramatic jump, rising from 5% to 5.3%, confirming that large-scale labor shedding has begun in the face of massive excess capacity. Speculation over the extent of the bad debt problems to which the Japanese banks are exposed, and lack of policy reform from Prime Minister Junichiro Koizumi, saw the Nikkei Index fall below the 10,000 level, hitting an 18-year low. OUTLOOK Equity markets are likely to remain nervous and volatile over the short term, a situation that has been exacerbated by the events of September 11th. Confidence has shown signs of returning recently due to a number of factors. The speedy progress in the Afghan military campaign, weaker-than-expected oil prices and the absence of any further terrorist attacks has resulted in a modest reduction in the global investment risk premium; nonetheless, terrorist threats on the US and the risk of further extraneous shocks still remain. As a result of the attacks, the global economic trough has been deferred until 2002 so that a "V"-shaped recovery will likely not take place until the second half of next year, with the more likely scenario of a more moderate rate of growth being achieved. Disinflation will likely remain the dominant and enduring global theme, reinforced by the deflationary shock resulting from the terrorist attacks in the US. In spite of this, and as a direct result of greater stimulative monetary and fiscal policy, global reflation has been slowly building throughout the year. For the first time since the 1980's, governments are pursuing fiscal stimulus policies. Indeed, with economic data remaining weak in the Asia-Pacific region, the governments of Korea (US$1.5 billion), Singapore (US$6 billion) and Hong Kong (US$1.2 billion) have all announced fiscal spending packages. The emerging markets asset class looks set for a better year in 2002 as global economic activity picks up in response to rising levels of 2 PHOENIX-ABERDEEN INTERNATIONAL SERIES liquidity and cheap borrowing rates. Valuations for these markets are back to 1998 crisis levels, with the asset class trading at 10x 2002 earnings despite improved macro fundamentals. Historically, shocks like the terrorists attacks in the US tend to lead to a sudden, albeit temporary, rise in investor risk aversion. The typical investor response to previous market shocks of this nature suggests that heightened risk aversion lasts between two to three months, during which time investors seek the relative security of bonds and cash. Once equities have found an absolute floor, the recovery period for equities extends anywhere between three months and one year. Equity markets have started to anticipate a moderate economic recovery for the middle of next year. In order for the markets to extend recent gains and justify current levels of valuation, there must be an improvement on the outlook for corporate earnings before they can enter into a new bull market phase. Indeed, inflation is expected to remain subdued due to the unwinding of enormous global over-capacity in a number of sectors, allowing central banks to keep monetary policy supportive. With bond yields at or near historic lows, the foundations are in place for a rebuilding of confidence and improved returns from the equity markets over the medium to long term. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC International Series MSCI EAFE Index(1) S&P 500 Index(2) 12/31/91 $10,000.00 $10,000.00 $10,000.00 12/31/92 8,719.13 8,814.84 10,769.10 12/31/93 12,070.40 11,718.70 11,846.00 12/30/94 12,073.60 12,663.00 12,002.70 12/29/95 13,231.90 14,125.60 16,504.60 12/31/96 15,699.00 15,024.40 20,341.50 12/31/97 17,589.70 15,333.30 27,130.70 12/31/98 22,501.40 18,450.90 34,932.50 12/31/99 29,138.00 23,487.70 42,315.50 12/29/00 24,530.00 20,209.30 38,427.90 12/31/01 18,633.30 15,923.80 33,864.70 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 1 YEAR 5 YEARS 10 YEARS - -------------------------------------------------------------------------------- International Series (24.04)% 3.49% 6.42% - -------------------------------------------------------------------------------- MSCI EAFE Index(1) (21.21)% 1.17% 4.76% - -------------------------------------------------------------------------------- S&P 500 Index(2) (11.87)% 10.73% 12.97% - -------------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 12/31/91. Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. (1) The Morgan Stanley Capital International EAFE Index is an unmanaged, commonly used measure of foreign stock fund performance which includes net dividends reinvested. Total return figures are net of foreign withholding taxes. The EAFE index is an aggregate of 19 individual country indexes in Europe, Australia, New Zealand and the Far East. (2) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 3 PHOENIX-ABERDEEN INTERNATIONAL SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE ---------- ------------ FOREIGN COMMON STOCKS--97.3% AUSTRALIA--1.5% QBE Insurance Group Ltd. (Insurance (Property-Casualty)) .......................... 594,600 $ 2,337,555 ------------ BRAZIL--1.9% Tele Norte Leste Participacoes SA ADR (Telecommunications (Long Distance)) .......... 100,000 1,563,000 Unibanco GDR (Banks (Money Center)) ............. 65,250 1,455,075 ------------ 3,018,075 ------------ FINLAND--3.1% Nokia Oyj (Communications Equipment) ............ 100,490 2,591,166 Stora Enso Oyj (Paper & Forest Products) ........ 187,450 2,400,038 ------------ 4,991,204 ------------ FRANCE--9.4% Assurances Generales de France (Insurance (Multi-Line)) ................................. 31,059 1,490,562 Aventis SA (Health Care (Drugs-Major Pharmaceuticals)) ............................. 33,887 2,406,233 Cap Gemini SA (Computers (Software & Services)).. 9,310 672,271 Castorama Dubois Investissement SA (Retail (Building Supplies)) .......................... 23,800 1,225,898 Club Mediterranee SA (Lodging - Hotels) ......... 29,541 1,078,407 Havas Advertising SA (Services (Advertising/ Marketing)) ................................... 193,810 1,402,945 L'Oreal SA (Household Products (Non-Durable)).... 25,600 1,844,006 Pechiney SA Class A (Containers & Packaging (Paper)) ...................................... 34,580 1,782,696 Schneider Electric SA (Electrical Equipment) .... 25,300 1,216,433 Valeo SA (Auto Parts & Equipment) ............... 47,020 1,875,575 ------------ 14,995,026 ------------ GERMANY--1.9% Allianz AG (Insurance (Multi-Line)) ............... 7,800 1,843,881 Bayerische Motoren Werke AG (Automobiles) ....... 32,140 1,131,791 ------------ 2,975,672 ------------ HONG KONG--2.7% Giordano International Ltd. (Retail (Specialty- Apparel)) ..................................... 5,988,000 2,649,269 Swire Pacific Ltd. Class B (Manufacturing (Diversified)) ................................ 2,410,000 1,730,733 ------------ 4,380,002 ------------ INDIA--0.7% Videsh Sanchar Nigam Ltd. ADR (Telecommunications (Long Distance)) .............................. 118,000 1,132,800 ------------ ITALY--4.2% ENI SpA (Oil) ..................................... 218,296 2,736,669 Sanpaolo IMI SpA (Banks (Money Center)) ......... 209,573 2,248,517 Telecom Italia Mobile SpA (Telecommunications (Cellular/Wireless)) .......................... 310,000 1,730,625 ------------ 6,715,811 ------------ JAPAN--17.9% Fuji Photo Film Co., Ltd. (Leisure Time (Products)) ................................... 70,000 2,499,619 Fujikura Ltd. (Electrical Equipment) ............ 482,000 1,809,431 Honda Motor Co. Ltd. (Automobiles) .............. 58,800 2,346,437 Kao Corp. (Household Products (Non-Durable)) .... 110,000 2,287,121 Mabuchi Motor Co., Ltd. (Electrical Equipment) .. 29,000 2,389,746 NTT DoCoMo, Inc. (Telecommunications (Cellular/ Wireless)) .................................... 170 1,997,559 Olympus Optical Co., Ltd. (Health Care (Medical Products & Supplies)) ......................... 182,000 2,617,656 SHARES VALUE ---------- ------------ JAPAN--CONTINUED Orix Corp. (Consumer Finance) ................... 25,100 $ 2,248,390 Rohm Co., Ltd. (Electronics (Semiconductors)) ... 13,000 1,687,243 Shin-Etsu Chemical Co., Ltd. (Chemicals (Specialty)) .................................. 71,000 2,551,580 Terumo Corp. (Health Care (Medical Products & Supplies)) .................................... 158,000 2,047,032 Uni-Charm Corp. (Household Products (Non-Durable)) 85,000 1,777,049 Yamanouchi Pharmaceutical Co., Ltd. (Health Care (Diversified)) ................................ 90,000 2,376,011 ------------ 28,634,874 ------------ MEXICO--0.6% Telefonos de Mexico SA de C.V. ADR Series L (Telecommunications (Long Distance)) ............ 28,500 998,070 ------------ NETHERLANDS--8.7% ASM Lithography Holding NV (Equipment (Semiconductors)) (b) ......................... 58,529 1,017,243 Buhrmann NV (Distributors (Food & Health)) ...... 118,190 1,297,531 DSM NV (Chemicals (Specialty)) .................. 54,990 2,007,924 IHC Caland NV (Oil & Gas (Drilling & Equipment)) 29,918 1,398,510 ING Groep NV (Financial (Diversified)) .......... 51,320 1,308,680 Koninklijke (Royal) Philips Electronics NV (Manufacturing (Diversified)) ................. 84,830 2,521,214 Royal Dutch Petroleum Co. (Oil) ................. 39,571 2,004,764 TNT Post Group NV (Air Freight) ................. 112,130 2,426,062 ------------ 13,981,928 ------------ SINGAPORE--1.8% Oversea-Chinese Banking Corp., Ltd. (Banks (Major Regional)) .................................... 493,000 2,936,908 ------------ SOUTH KOREA--0.8% Korea Telecom Corp. ADR (Telecommunications (Long Distance)) .............................. 64,400 1,309,252 ------------ SPAIN--6.4% Acerinox SA (Iron & Steel) ........................ 45,985 1,537,446 Altadis SA (Tobacco) ............................ 126,675 2,154,260 Grupo Dragados SA (Engineering & Construction) .. 125,640 1,681,360 Telefonica SA (Telecommunications (Long Distance)) (b) ................................ 180,000 2,408,826 Union Fenosa SA (Electric Companies) ............ 147,547 2,388,351 ------------ 10,170,243 ------------ SWEDEN--4.8% Assa Abloy AB Class B (Machinery (Diversified)) . 139,511 2,008,273 Nordea AB (Banks (Major Regional)) .............. 482,200 2,551,277 Skandia Forsakrings AB (Insurance (Life/Health)) 253,210 1,834,559 Volvo AB (Trucks & Parts) ....................... 81,500 1,367,438 ------------ 7,761,547 ------------ SWITZERLAND--8.1% Adecco SA Registered Shares (Services (Employment)) ................................. 31,170 1,694,338 Credit Suisse Group Registered Shares (Banks (Money Center)) ............................... 66,120 2,819,565 Nestle SA Registered Shares Class B (Foods) ..... 11,350 2,419,999 Swiss Re Registered Shares (Insurance (Property- Casualty)) .................................... 29,590 2,976,305 UBS AG Registered Shares (Financial (Diversified)) 31,300 1,579,808 Zurich Financial Services AG (Insurance (Multi- Line)) ........................................ 6,400 1,501,425 ------------ 12,991,440 ------------ UNITED KINGDOM--22.8% 3i Group plc (Investment Banking/Brokerage) ..... 122,000 1,526,132 Anglo American plc (Metals Mining) .............. 110,000 1,666,594 BOC Group plc (Chemicals (Specialty)) ........... 75,000 1,157,054 See Notes to Financial Statements 4 PHOENIX-ABERDEEN INTERNATIONAL SERIES SHARES VALUE ---------- ------------ UNITED KINGDOM--CONTINUED BP plc (Oil) .................................... 570,000 $ 4,429,987 BT Group plc (Telecommunications (Long Distance)) (b) ................................ 300,000 1,104,659 Carlton Communications plc (Entertainment) ...... 200,000 707,331 Dixons Group plc (Retail (Computers & Electronics)) ................................. 500,000 1,710,111 FirstGroup plc (Services (Commercial & Consumer)) 246,000 1,052,613 GlaxoSmithKline plc (Health Care (Drugs-Major Pharmaceuticals)) ............................. 130,000 3,259,980 HSBC Holdings plc (Financial (Diversified)) ..... 321,000 3,765,533 Logica plc (Computers (Software & Services)) .... 130,000 1,210,904 Marconi plc (Communications Equipment) .......... 310,000 188,367 mm02 plc (Telecommunications (Cellular/Wireless)) (b) ...................... 300,000 377,680 Prudential plc (Insurance (Life/Health)) ........ 160,000 1,853,614 Reuters Group plc (Publishing) .................. 135,000 1,336,070 Royal Bank of Scotland Group plc (Banks (Money Center)) ...................................... 90,000 2,190,106 Schroders plc (Investment Management) ........... 80,000 983,859 Serco Group plc (Services (Commercial & Consumer)) 260,000 1,381,187 Shire Pharmaceuticals Group plc (Health Care (Diversified)) (b) ............................ 166,500 2,084,006 Vodafone Group plc (Telecommunications (Cellular/Wireless)) .......................... 1,750,000 4,578,185 ------------ 36,563,972 TOTAL FOREIGN COMMON STOCKS (Identified cost $179,070,080) ............................ 155,894,379 ------------ FOREIGN PREFERRED STOCKS--1.3% SOUTH KOREA--1.3% Samsung Electronics Co. Ltd. Pfd. (Electronics (Semiconductors)) ............................. 24,700 2,134,336 ------------ TOTAL FOREIGN PREFERRED STOCKS (Identified cost $1,415,801) .............................. 2,134,336 ------------ TOTAL LONG-TERM INVESTMENTS--98.6% (Identified cost $180,485,881) ............................ 158,028,715 ------------ STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) ---------- ----- SHORT-TERM OBLIGATIONS--1.5% FEDERAL AGENCY SECURITIES--1.5% Freddie Mac 1.47%, 1/2/02 .................. AAA $2,345 2,344,904 ------------ TOTAL SHORT-TERM OBLIGATIONS (Identified cost $2,344,904) .............................. 2,344,904 ------------ TOTAL INVESTMENTS--100.1% (Identified cost $182,830,785) ............................ 160,373,619(a) Other assets and liabilities, net--(0.1)% ................. (149,542) ------------ NET ASSETS--100.0% .......................................... $160,224,077 ============ (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $8,097,821 and gross depreciation of $31,668,881 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $183,944,679. (b) Non-income producing. See Notes to Financial Statements 5 PHOENIX-ABERDEEN INTERNATIONAL SERIES INDUSTRY DIVERSIFICATION AS A PERCENTAGE OF TOTAL VALUE OF TOTAL LONG-TERM INVESTMENTS (UNAUDITED) Air Freight ...................................... 1.5% Auto Parts & Equipment ........................... 1.2 Automobiles ...................................... 2.2 Banks (Major Regional) ........................... 3.4 Banks (Money Center) ............................. 5.4 Chemicals (Specialty) ............................ 3.6 Communications Equipment ......................... 1.7 Computers (Software & Services) .................. 1.2 Consumer Finance ................................. 1.4 Containers & Packaging (Paper) ................... 1.1 Distributors (Food & Health) ..................... 0.8 Electric Companies ............................... 1.5 Electrical Equipment ............................. 3.4 Electronics (Semiconductors) ..................... 2.4 Engineering & Construction ....................... 1.0 Entertainment .................................... 0.4 Equipment (Semiconductors) ....................... 0.6 Federal Agency Securities ........................ 1.5 Financial (Diversified) .......................... 4.1 Foods ............................................ 1.5 Health Care (Diversified) ........................ 2.8 Health Care (Drugs-Major Pharmaceuticals) ........ 3.5 Health Care (Medical Products & Supplies) ........ 2.9 Household Products (Non-Durable) ................. 3.7 Insurance (Life/Health) .......................... 2.3 Insurance (Multi-Line) ........................... 3.0 Insurance (Property-Casualty) .................... 3.3 Investment Banking/Brokerage ..................... 0.9 Investment Management ............................ 0.6 Iron & Steel ..................................... 1.0 Leisure Time (Products) .......................... 1.6 Lodging - Hotels ................................. 0.7 Machinery (Diversified) .......................... 1.3 Manufacturing (Diversified) ...................... 2.6 Metals Mining .................................... 1.0 Oil .............................................. 5.7 Oil & Gas (Drilling & Equipment) ................. 0.9 Paper & Forest Products .......................... 1.5 Publishing ....................................... 0.8 Retail (Building Supplies) ....................... 0.8 Retail (Computers & Electronics) ................. 1.1 Retail (Specialty-Apparel) ....................... 1.7 Services (Advertising/Marketing) ................. 0.9 Services (Commercial & Consumer) ................. 1.5 Services (Employment) ............................ 1.1 Telecommunications (Cellular/Wireless) ........... 5.4 Telecommunications (Long Distance) ............... 5.3 Tobacco .......................................... 1.3 Trucks & Parts ................................... 0.9 ----- 100.0% ===== See Notes to Financial Statements 6 PHOENIX-ABERDEEN INTERNATIONAL SERIES
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $182,830,785) ...................................... $160,373,619 Receivables Investment securities sold ....................................................................... 625,169 Tax reclaim ...................................................................................... 231,355 Dividends and interest ........................................................................... 83,244 Fund shares sold ................................................................................. 59,610 Prepaid expenses ................................................................................... 1,650 ------------ Total assets ................................................................................... 161,374,647 ------------ LIABILITIES Payables Fund shares repurchased .......................................................................... 891,026 Investment advisory fee .......................................................................... 102,652 Printing fee ..................................................................................... 77,712 Financial agent fee .............................................................................. 13,967 Trustees' fee .................................................................................... 3,262 Accrued expenses ................................................................................... 61,951 ------------ Total liabilities .............................................................................. 1,150,570 ------------ NET ASSETS ......................................................................................... $160,224,077 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................................. $215,204,481 Undistributed net investment income .............................................................. 478 Accumulated net realized loss .................................................................... (32,522,408) Net unrealized depreciation ...................................................................... (22,458,474) ------------ NET ASSETS ......................................................................................... $160,224,077 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ................... 16,378,993 ============ Net asset value and offering price per share ....................................................... $9.78 ===== STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends ........................................................................................ $ 3,442,332 Interest ......................................................................................... 156,181 Foreign taxes withheld ........................................................................... (337,308) ------------ Total investment income ........................................................................ 3,261,205 ------------ EXPENSES Investment advisory fee .......................................................................... 1,411,759 Financial agent fee ................................................................................ 188,307 Custodian ........................................................................................ 169,981 Printing ......................................................................................... 96,324 Professional ..................................................................................... 28,876 Trustees ......................................................................................... 8,438 Miscellaneous .................................................................................... 9,095 ------------ Total expenses ................................................................................. 1,912,780 ------------ NET INVESTMENT INCOME .............................................................................. 1,348,425 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................................. (32,408,972) Net realized loss on foreign currency transactions ............................................... (224,911) Net change in unrealized appreciation (depreciation) on investments .............................. (23,429,910) Net change in unrealized appreciation (depreciation) on foreign currency and foreign currency transactions .................................................................. 5,342 ------------ NET LOSS ON INVESTMENTS ............................................................................ (56,058,451) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................................... $(54,710,026) ============
See Notes to Financial Statements 7 PHOENIX-ABERDEEN INTERNATIONAL SERIES STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ------------ ------------- FROM OPERATIONS Net investment income (loss) .................................................................. $ 1,348,425 $ 1,456,728 Net realized gain (loss) ...................................................................... (32,633,883) 19,976,599 Net change in unrealized appreciation (depreciation) .......................................... (23,424,568) (65,850,375) ------------ ------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................... (54,710,026) (44,417,048) ------------ ------------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ......................................................................... -- (1,089,135) Net realized short-term gains ................................................................. (2,072,805) (6,644,417) Net realized long-term gains .................................................................. (3,087,812) (13,214,282) ------------ ------------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ..................................... (5,160,617) (20,947,834) ------------ ------------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (15,133,649 and 10,617,484 shares, respectively) ................ 163,527,768 165,343,109 Net asset value of shares issued from reinvestment of distributions (492,572 and 1,515,915 shares, respectively) ............................................................. 5,160,617 20,947,834 Cost of shares repurchased (16,881,045 and 11,896,749 shares, respectively) ................... (182,202,911) (186,289,552) ------------ ------------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ..................................... (13,514,526) 1,391 ============ ============= NET INCREASE (DECREASE) IN NET ASSETS ......................................................... (73,385,169) (65,363,491) NET ASSETS Beginning of period ........................................................................... 233,609,246 298,972,737 ------------ ------------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) AND DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME OF $478 AND ($1,142,917), RESPECTIVELY) ............................ $160,224,077 $ 233,609,246 ============ =============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
YEAR ENDED DECEMBER 31, -------------------------------------------------- 2001 2000 1999 1998 1997 ------ ------ ------ ------ ------ Net asset value, beginning of period ..................................... $13.25 $17.19 $15.46 $14.53 $14.52 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ........................................... 0.06 0.08 0.23 0.12(1) 0.12(1) Net realized and unrealized gain (loss) ................................ (3.23) (2.77) 4.13 3.94 1.61 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ..................................... (3.17) (2.69) 4.36 4.06 1.73 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ..................................... -- (0.06) (0.39) -- (0.22) Dividends from net realized gains ...................................... (0.30) (1.19) (2.24) (3.13) (1.50) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS .................................................. (0.30) (1.25) (2.63) (3.13) (1.72) ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ................................................ (3.47) (3.94) 1.73 0.93 0.01 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ........................................... $ 9.78 $13.25 $17.19 $15.46 $14.53 ====== ====== ====== ====== ====== Total return ............................................................. (24.04)% (15.81)% 29.49% 27.92% 12.04% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) .................................. $160,224 $233,609 $298,973 $241,915 $194,108 RATIO TO AVERAGE NET ASSETS OF: Operating expenses ..................................................... 1.02% 1.02% 1.01% 0.98% 1.01% Net investment income .................................................. 0.72% 0.54% 0.81% 0.72% 0.72% Portfolio turnover rate .................................................. 74% 94% 79% 93% 184% (1) Computed using average shares outstanding.
See Notes to Financial Statements 8 PHOENIX-ABERDEEN NEW ASIA SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking long-term capital appreciation from a diversified portfolio invested primarily in equity securities of issuers located in at least three different countries in Asia, other than Japan ("New Asia"). Distribution of investment income, such as dividends and interest, is incidental in the selection of investments. INVESTMENT ADVISER'S REPORT For the 12 months ended December 31, 2001, the Fund returned 1.02% compared with a return of -2.40% for its benchmark, the MSCI AC Asia Pacific Free Ex. Japan Index(1). The period under review was a trying time for Asian economies, as countries had to deal with the double-whammy of slowing export growth and the after-effects of September 11th. Following the terrorist attacks, even perennial optimists were forced to reverse their bullish scenarios for a quick-fire US rebound. Indeed, it was surely wishful thinking to believe that the termination of one of the longest bull market runs in US history would be followed by the mildest of recessions. The ongoing recession in the US can be expected to last until at least the second half of 2002. This in turn is unlikely to offer any solace for Asia, save for the thought that the current slowdown is brought on predominantly by external variables. Technology, which had led the broader market on the upturn (leading to the Nasdaq peaking above 5,000 in March 2000), became the pariah of the markets in 2001. As a result, companies were forced to cut back on their investments, and the build-up in inventories had to be addressed. As technology wilted, so did global economic growth. The US and Japan--the world's two biggest economies--fell into recession. The rest of Asia in turn suffered, with perceived 'safe haven' economies like Singapore also giving in to recessionary headwinds. In response, governments in the region have had no choice but to scale back growth forecasts. In Singapore, advance estimates showed that GDP fell by 7% year-on-year in the fourth quarter last year. For the whole of 2001, a 2.2% contraction is estimated, with a range of -2% to +2% now expected in 2002. Meanwhile, Thailand once again cut its 2001 GDP projection to 1.5%, Malaysia to 0.5-1%, and South Korea to 2.5%. The notable exception was China, where a series of market liberalisations and positive developments stemming from the country's accession into the World Trade Organization have buoyed the mood of the investing public. While exports have come off their earlier breakneck pace in the mainland, this has been effectively absorbed by healthy domestic consumption and adequate fiscal pump-priming measures. Within Asia, Singapore remained our preferred market. We were especially overweight in the banking sector, where the pace of mergers and consolidation has surged since June. At the corporate level, much is happening in the city-state relating to the restructuring of government-linked companies and an increased emphasis on rewarding shareholders. We are also overweight in other South East Asian markets like Thailand, Indonesia, Philippines, and India, largely on valuations and good company quality. Stock wise, our largest exposures in Asia were in companies that were committed toward reform and restructuring, had adequate cash on the balance sheet, were well-run, and traded at relatively undemanding valuations. For example, in Hong Kong we held Giordano International, a prime example of a company that benefits from the cheaper cost of manufacturing in China. Giordano has a strong balance sheet, and is blessed with focused and professional management. Another holding with exposure to the Hong Kong/China market is Swire Pacific, a conglomerate with operations stretching from Coke bottling, property development and investment, aviation, to ports management. We hold the B-shares, which have the same voting rights as the A-tranche, but trade at a substantial discount. In Singapore, our proclivity for restructuring themes was reflected in our holdings in the domestic banking sector. For example, we held United Overseas Bank, which received unconditional approval for its takeover of Overseas Union Bank. The ongoing banking sector consolidation bodes well for the industry, and should result in increased efficiency going forward. Relatively inexpensive valuations and good management were the chief underlying factors behind our decision to hold Malaysian Oxygen in Malaysia. Malaysian Oxygen is the country's leading producer of industrial gases and electrodes. Korea Telecom, the dominant telephone provider in South Korea, was also held based on a valuation perspective. 9 PHOENIX-ABERDEEN NEW ASIA SERIES OUTLOOK Even as regional growth has stumbled, stock markets have thrown caution to the winds by recovering all of their post-September 11th losses. For now, abundant liquidity and massive doses of both fiscal and monetary stimuli have helped support stock exchanges. It remains to be seen, however, if the recovery can be sustained, as corporate earnings remain a major worry going forward. Other factors in Asia's favor are current account surpluses enjoyed by most countries, ample foreign exchange reserves and substantial inroads made by governments in cutting debt. Asia also remains cheap from a global valuation perspective. Thus, even if the recovery time frame for the US economy proves to be optimistic, the relative price attractiveness of Asian stocks will be a major plus for the region. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
MSCI AC Asia Pacific Free New Asia Series Ex. Japan Index(1) S&P 500 Index(2) 9/17/96 $10,000.00 $10,000.00 $10,000.00 12/31/96 10,015.70 10,348.50 10,920.70 12/31/97 6,771.58 6,808.84 14,565.60 12/31/98 6,470.61 6,508.13 18,754.10 12/31/99 9,767.86 9,751.46 22,717.80 12/29/00 8,208.55 6,828.99 20,630.70 12/31/01 8,292.48 6,665.09 18,180.80
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01
FROM INCEPTION 9/17/96 TO 1 YEAR 5 YEARS 12/31/01 - ---------------------------------------------------------------------------------------- New Asia Series 1.02% (3.71)% (3.48)% - ---------------------------------------------------------------------------------------- MSCI AC Asia Pacific Free Ex. Japan Index(1) (2.40)% (8.42)% (7.43)% - ---------------------------------------------------------------------------------------- S&P 500 Index(2) (11.87)% 10.73% 11.96% - ----------------------------------------------------------------------------------------
This chart assumes an initial gross investment of $10,000 made on 9/17/96 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. (1) Morgan Stanley Capital International All Country Asia Pacific Free (excluding Japan) Index is a market-value weighted average of the performance of securities listed on the stock exchanges of 14 countries in Asia and the Pacific Basin. Performance is calculated on a total return basis, as reported by Frank Russell Company. (2) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 10 PHOENIX-ABERDEEN NEW ASIA SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE --------- ----------- FOREIGN COMMON STOCKS--89.6% AUSTRALIA--9.9% BRL Hardy Ltd. (Beverages (Alcoholic)) .......... 58,000 $ 28,069 Leighton Holdings Ltd. (Engineering & Construction) ................................. 55,916 296,246 QBE Insurance Group Ltd. (Insurance (Property- Casualty)) .................................... 105,000 412,787 Rio Tinto Ltd. (Metals Mining) .................. 16,500 314,248 ----------- 1,351,350 ----------- CHINA--4.7% PetroChina Co. Ltd. (Oil) ....................... 1,750,000 309,701 Zhejiang Expressway Co. Ltd. (Services (Commercial & Consumer)) .................................. 1,350,000 332,399 ----------- 642,100 ----------- HONG KONG--17.1% China Mobile (Hong Kong) Ltd. (Telecommunications (Cellular/Wireless)) (b) ...................... 80,000 281,616 Dah Sing Financial Group (Banks (Major Regional)) 53,800 254,586 Giordano International Ltd. (Retail (Specialty- Apparel)) ..................................... 1,200,000 530,916 Hong Kong Exchanges & Clear (Investment Banking/ Brokerage) .................................... 82,000 124,611 MTR Corp. Ltd. (Railroads) ...................... 175,000 228,909 Swire Pacific Ltd. Class B (Manufacturing (Diversified)) ................................ 850,000 610,425 Wing Hang Bank Ltd. (Banks (Major Regional)) .... 90,000 288,541 ----------- 2,319,604 ----------- INDIA--7.8% Bharat Petroleum Corporation Ltd. (Oil & Gas (Refining & Marketing)) ....................... 72,000 282,207 Gas Authority of India Ltd. GDR (Oil & Gas (Refining & Marketing)) ....................... 35,000 275,625 ICICI Ltd. (Financial (Diversified)) ............ 175,500 159,959 Videsh Sanchar Nigam Ltd. ADR (Telecommunications (Long Distance)) .............................. 35,000 336,000 ----------- 1,053,791 ----------- INDONESIA--2.5% PT Unilever Indonesia Tbk (Household Products (Non-Durable)) ................................ 218,000 342,721 ----------- MALAYSIA--7.7% Carlsberg Brewery Malaysia Berhad (Beverages (Alcoholic)) .................................. 45,000 127,893 Malaysian Oxygen Berhad (Chemicals (Specialty)) . 150,000 402,626 Public Bank Berhad (Banks (Major Regional)) ..... 400,000 281,049 Sime UEP Properties Berhad (Homebuilding) ....... 250,000 236,839 ----------- 1,048,407 ----------- PHILIPPINES--3.6% Ayala Land, Inc. (Financial (Diversified)) ...... 2,250,000 211,482 Bank of the Philippine Islands (Banks (Major Regional)) .................................... 118,750 132,328 La Tondena Distillers, Inc. (Beverages (Alcoholic) 319,600 145,554 ----------- 489,364 ----------- SINGAPORE--12.8% Oversea-Chinese Banking Corp., Ltd. (Banks (Major Regional)) .................................... 70,000 417,005 Robinson & Co., Ltd. (Retail (Department Stores)) 125,000 301,922 Singapore Airlines Ltd. (Airlines) .............. 45,000 268,075 SMRT Corp., Ltd. (Railroads) .................... 425,000 164,568 United Overseas Bank Ltd. (Banks (Major Regional)) 84,400 580,493 ----------- 1,732,063 ----------- SHARES VALUE --------- ----------- SOUTH KOREA--7.4% Kookmin Bank (Banks (Money Center)) ............. 11,660 $ 442,077 Korea Telecom Corp. (Telecommunications (Long Distance)) .................................... 10,000 380,282 Pohang Iron & Steel Co. Ltd. (Iron & Steel) ..... 2,000 185,763 ----------- 1,008,122 ----------- SRI LANKA--1.8% Keells (John) Holdings Ltd. (Foods) ............. 200,000 129,884 National Development Bank Ltd. (Banks (Major Regional)) .................................... 150,000 115,527 ----------- 245,411 ----------- TAIWAN--7.4% Bank Sinopac (Banks (Major Regional)) ........... 953,150 397,713 Fubon Financial Holding Co. Ltd. (Insurance (Property-Casualty)) (b) ...................... 300,000 260,646 Standard Foods Taiwan Ltd. GDR (Foods) .......... 52,447 56,380 Taiwan Cellular Corp. (Telecommunications (Cellular/Wireless)) (b) ...................... 216,000 288,905 ----------- 1,003,644 ----------- THAILAND--5.2% Hana Microelectronics Public Co., Ltd. (Electrical Equipment) .................................... 130,800 218,838 Phatra Insurance Public Co., Ltd. (Insurance (Property-Casualty)) .......................... 71,600 142,455 PTT Exploration and Production Public Co. Ltd. .. (Oil & Gas (Exploration & Production)) ........ 135,000 341,849 ----------- 703,142 ----------- UNITED KINGDOM--1.7% Rowe Evans Investments Group plc (Agricultural Products) ..................................... 200,000 231,411 TOTAL FOREIGN COMMON STOCKS (Identified cost $13,379,933) ............................. 12,171,130 ----------- FOREIGN PREFERRED STOCKS--3.2% SOUTH KOREA--3.2% Samsung Electronics Co. Ltd. Pfd. (Electronics (Semiconductors)) ............................. 5,000 432,052 ----------- TOTAL FOREIGN PREFERRED STOCKS (Identified cost $343,513) ................................ 432,052 ----------- TOTAL LONG-TERM INVESTMENTS--92.8% (Identified cost $13,723,446) ............................. 12,603,182 ----------- STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) -------- ----- SHORT-TERM OBLIGATIONS--3.7% FEDERAL AGENCY SECURITIES--3.7% Freddie Mac 1.72%, 1/2/02 ........... AAA $ 500 499,979 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $499,980) ................................ 499,979 ----------- TOTAL INVESTMENTS--96.5% (Identified cost $14,223,425) ............................. 13,103,161(a) Other assets and liabilities, net--3.5% ................... 472,005 ----------- NET ASSETS--100.0% .......................................... $13,575,166 =========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $1,214,032 and gross depreciation of $2,416,861 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $14,305,990. (b) Non-income producing. See Notes to Financial Statements 11 PHOENIX-ABERDEEN NEW ASIA SERIES INDUSTRY DIVERSIFICATION AS A PERCENTAGE OF TOTAL VALUE OF TOTAL LONG-TERM INVESTMENTS (UNAUDITED) Agricultural Products ............................ 1.8% Airlines ......................................... 2.1 Banks (Major Regional) ........................... 19.6 Banks (Money Center) ............................. 3.5 Beverages (Alcoholic) ............................ 4.8 Chemicals (Specialty) ............................ 3.2 Electrical Equipment ............................. 1.7 Electronics (Semiconductors) ..................... 3.4 Engineering & Construction ....................... 2.4 Financial (Diversified) .......................... 3.0 Foods ............................................ 1.5 Homebuilding ..................................... 1.9 Household Products (Non-Durable) ................. 2.7 Insurance (Property-Casualty) .................... 6.5 Investment Banking/Brokerage ..................... 1.0 Iron & Steel ..................................... 1.5 Manufacturing (Diversified) ...................... 4.8 Metals Mining .................................... 2.5 Oil .............................................. 2.5 Oil & Gas (Exploration & Production) ............. 2.7 Oil & Gas (Refining & Marketing) ................. 4.4 Railroads ........................................ 3.1 Retail (Department Stores) ....................... 2.4 Retail (Specialty-Apparel) ....................... 4.2 Services (Commercial & Consumer) ................. 2.6 Telecommunications (Cellular/Wireless) ........... 4.5 Telecommunications (Long Distance) ............... 5.7 ----- 100.0% ===== See Notes to Financial Statements 12 PHOENIX-ABERDEEN NEW ASIA SERIES
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $14,223,425) ............................................... $13,103,161 Cash ....................................................................................................... 4,244 Foreign currency at value (Identified cost $15,965) ........................................................ 15,742 Receivables Investment securities sold ............................................................................... 720,701 Dividends and interest ................................................................................... 16,651 Receivable from adviser .................................................................................. 4,758 Fund shares sold ......................................................................................... 1,989 Prepaid expenses ........................................................................................... 107 ----------- Total assets ............................................................................................. 13,867,353 ----------- LIABILITIES Payables Fund shares repurchased .................................................................................. 226,101 Professional fee ......................................................................................... 30,269 Printing fee ............................................................................................. 16,841 Financial agent fee ...................................................................................... 3,832 Trustees' fee ............................................................................................ 3,262 Accrued expenses ........................................................................................... 11,882 ----------- Total liabilities ...................................................................................... 292,187 ----------- NET ASSETS ................................................................................................. $13,575,166 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ......................................................... $16,881,110 Undistributed net investment income ...................................................................... 120,639 Accumulated net realized loss ............................................................................ (2,307,771) Net unrealized depreciation .............................................................................. (1,118,812) ----------- NET ASSETS ................................................................................................. $13,575,166 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ........................... 1,842,564 =========== Net asset value and offering price per share ............................................................... $7.37 ===== STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends ................................................................................................ $ 488,606 Interest ................................................................................................. 12,418 Foreign taxes withheld ................................................................................... (28,353) ----------- Total investment income ................................................................................ 472,671 ----------- EXPENSES Investment advisory fee .................................................................................. 127,972 Financial agent fee ...................................................................................... 46,340 Custodian ................................................................................................ 65,212 Professional ............................................................................................. 30,801 Printing ................................................................................................. 22,133 Trustees ................................................................................................. 8,437 Miscellaneous ............................................................................................ 7,977 ----------- Total expenses ......................................................................................... 308,872 Less expenses borne by investment adviser .............................................................. (148,923) ----------- Net expenses ........................................................................................... 159,949 ----------- NET INVESTMENT INCOME ...................................................................................... 312,722 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .......................................................................... (984,610) Net realized loss on foreign currency transactions ....................................................... (14,465) Net change in unrealized appreciation (depreciation) on investments ...................................... 849,589 Net change in unrealized appreciation (depreciation) on foreign currency and foreign currency transactions 5,818 ----------- NET LOSS ON INVESTMENTS .................................................................................... (143,668) ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....................................................... $ 169,054 ===========
See Notes to Financial Statements 13 PHOENIX-ABERDEEN NEW ASIA SERIES STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ----------- ------------ FROM OPERATIONS Net investment income (loss) ............................................. $ 312,722 $ 392,349 Net realized gain (loss) ................................................. (999,075) 1,338,720 Net change in unrealized appreciation (depreciation) ..................... 855,407 (4,416,674) ----------- ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .............. 169,054 (2,685,605) ----------- ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income .................................................... (289,069) (436,041) ----------- ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ................ (289,069) (436,041) ----------- ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (2,340,672 and 1,832,384 shares, respectively) .......................................................... 16,679,198 15,800,361 Net asset value of shares issued from reinvestment of distributions (40,074 and 56,410 shares, respectively) ................................ 289,069 436,041 Cost of shares repurchased (2,344,849 and 2,029,290 shares, respectively) (16,761,270) (17,464,953) ----------- ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................ 206,997 (1,228,551) ----------- ------------ NET INCREASE (DECREASE) IN NET ASSETS .................................... 86,982 (4,350,197) NET ASSETS Beginning of period ...................................................... 13,488,184 17,838,381 ----------- ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $120,639 AND $82,172, RESPECTIVELY) .......................... $13,575,166 $ 13,488,184 =========== ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
YEAR ENDED DECEMBER 31, ----------------------------------------------- 2001 2000 1999 1998 1997 ------ ------ ------ ------ ------ Net asset value, beginning of period .................................... $ 7.47 $ 9.16 $ 6.13 $ 6.44 $ 9.96 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .......................................... 0.19 0.22 0.11(2) 0.13(2) 0.15 Net realized and unrealized gain (loss) ............................... (0.12) (1.67) 3.00 (0.41) (3.36) ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .................................... 0.07 (1.45) 3.11 (0.28) (3.21) ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .................................. (0.17) (0.24) (0.08) (0.03) (0.25) Dividends from net realized gains ..................................... -- -- -- -- (0.01) Tax return of capital ................................................. -- -- -- -- (0.05) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS ................................................. (0.17) (0.24) (0.08) (0.03) (0.31) ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ............................................... (0.10) (1.69) 3.03 (0.31) (3.52) ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD .......................................... $ 7.37 $ 7.47 $ 9.16 $ 6.13 $ 6.44 ====== ====== ====== ====== ====== Total return ............................................................ 1.02% (15.96)% 50.96% (4.44)% (32.39)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ................................. $13,575 $13,488 $17,838 $9,510 $10,017 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) ................................................... 1.25% 1.25% 1.25% 1.25% 1.25% Net investment income ................................................. 2.44% 2.42% 1.49% 2.09% 1.63% Portfolio turnover rate ................................................. 46% 60% 35% 46% 27% (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 2.41%, 2.41%, 2.39%, 2.50% and 2.00% for the periods ended December 31, 2001, 2000, 1999, 1998 and 1997, respectively. (2) Computed using average shares outstanding.
See Notes to Financial Statements 14 PHOENIX-AIM MID-CAP EQUITY SERIES INVESTOR PROFILE This Fund is appropriate for investors seeking long-term growth of capital. INVESTMENT ADVISER'S REPORT Since its inception on 10/29/01, the Phoenix-AIM Mid-Cap Equity Series posted a positive return of 6.55% through the end of December. The portfolio had positive returns in eight out of the 10 S&P sectors. The Portfolio did underperform its benchmark, the Russell MidCap Index(1), which posted a return of 11.20%. Good stock selection and overweight positions in both the Industrial and Material Sectors were the largest positive contributors to the portfolio's relative performance during the period. Underweight positions and stock selection in Information Technology and the Consumer Discretionary sectors as well as an underweight position in the Financial sector were the largest detractors from the relative performance. As of the end of December, portfolio managers: 1) Held underweight positions in the Financials and Consumer Discretionary sectors relative to the benchmark index, and 2) Held overweight positions in the Industrial and Materials sectors relative to the benchmark index. The markets and the economy remained volatile throughout 2001. Negative earnings announcements and revisions were prevalent during the year as many corporations were caught off guard by the magnitude of the economic slowdown that began in the latter part of 2000. This slowdown followed 10 years of growth--the longest expansion on record. The terrorist attacks on the United States on September 11th dealt a huge blow to an already faltering U.S. economy. The attacks cost over $60 billion in real estate, income and job losses. The New York Stock Exchange (NYSE) closed for four days following the attacks, and the U.S. economy was at a virtual standstill during the initial weeks following the attacks. The week the NYSE reopened, the Dow Jones Industrial Average (DJIA) was off 1,370 points, the worst five-day performance for the index since the Great Depression. The DJIA has since recovered to pre-attack levels but remains below its highs in 2000. The year 2001 ended with growth stocks out of favor and value stocks strongly outperforming growth stocks for the full year. However, since the market lows in late September, the performance differential between growth and value has narrowed, as growth stocks and small cap growth companies have outperformed value issues. Large cap growth stocks were hit hardest during the year with small cap value-oriented stocks being the best performers. With our diversified positioning, the fund remains very flexible and is prepared to add stocks as they fit into the fund's strategy- seeking long-term capital growth by investing in medium-sized U.S. companies. OUTLOOK Many economic indicators have begun to show signs of stabilization and point to an improving economic landscape. In 2001, an unprecedented amount of fiscal and monetary stimulus was injected into the economy. The U.S. government spent approximately $100 billion following the events of September 11th to help bailout the airline industry, rebuild New York City and the Pentagon and defend the United States against terrorism. The Federal Open Market Committee cut short term interest rates by 4.75% taking rates from 6.50% at the beginning of the year to the current 1.75%. Corporate inventories declined dramatically during the year and are now more in line with consumer demand, and the price of oil has declined in recent months. While we recognize that a few drags on the economy remain, e.g. consumer debt burden, a post technology bubble environment, deflation risk, etc., the evidence pointing to a recovery in 2002 outweigh the lingering drags, and we believe that U.S. GDP growth will be positive in the second half of 2002. (1) The Russell MidCap Index is an unmanaged, commonly used measure of mid-cap stock total return performance. The index is not available for direct investment. Returns indicate past performance, which is not predictive of future performance. 15 PHOENIX-AIM MID-CAP EQUITY SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE --------- ----------- COMMON STOCKS--78.3% AUTO PARTS & EQUIPMENT--1.0% Gentex Corp. (b) ................................ 1,400 $ 37,422 BANKS (REGIONAL)--1.4% Marshall & Ilsley Corp. ......................... 400 25,312 TCF Financial Corp. ............................. 600 28,788 ---------- 54,100 ---------- BEVERAGES (ALCOHOLIC)--1.7% Coors (Adolph) Co. Class B ...................... 1,200 64,080 ---------- BUILDING MATERIALS--1.0% Dal-Tile International, Inc. (b) ................ 1,700 39,525 ---------- CHEMICALS--0.8% Rohm & Haas Co. ................................. 900 31,167 ---------- CHEMICALS (SPECIALTY)--2.2% Cambrex Corp. ................................... 1,000 43,600 OM Group, Inc. .................................. 600 39,714 ---------- 83,314 ---------- COMMUNICATIONS EQUIPMENT--1.8% Advanced Fibre Communications, Inc. (b) ......... 1,800 31,806 L-3 Communications Holdings, Inc. (b) ........... 400 36,000 ---------- 67,806 ---------- COMPUTERS (SOFTWARE & SERVICES)--2.3% BMC Software, Inc. (b) .......................... 2,400 39,288 Mentor Graphics Corp. (b) ....................... 800 18,856 Wind River Systems, Inc. (b) .................... 1,500 26,865 ---------- 85,009 CONSTRUCTION (CEMENT & AGGREGATES)--1.0% Martin Marietta Materials, Inc. ................. 800 37,280 ---------- CONSUMER FINANCE--2.4% Capital One Financial Corp. ..................... 700 37,765 Certegy, Inc. (b) ............................... 1,500 51,330 ---------- 89,095 ---------- CONTAINERS & PACKAGING (PAPER)--1.0% Pactiv Corp. (b) ................................ 2,100 37,275 ---------- DISTRIBUTORS (FOOD & HEALTH)--0.9% ARAMARK Corp. Class B (b) ....................... 1,300 34,970 ---------- ELECTRIC COMPANIES--2.0% CMS Energy Corp. ................................ 1,400 33,642 Wisconsin Energy Corp. .......................... 1,800 40,608 ---------- 74,250 ---------- ELECTRICAL EQUIPMENT--6.2% Amphenol Corp. Class A (b) ...................... 1,000 48,050 Cooper Industries, Inc. ......................... 800 27,936 Harman International Industries, Inc. ........... 900 40,590 Molex Inc. Class A .............................. 1,300 35,165 SPX Corp. (b) ................................... 600 82,140 ---------- 233,881 ---------- ELECTRONICS (DEFENSE)--1.6% Raytheon Co. .................................... 1,800 58,446 ---------- ELECTRONICS (SEMICONDUCTORS)--2.6% Lattice Semiconductor Corp. (b) ................... 2,200 45,254 Microchip Technology, Inc. (b) .................. 1,400 54,236 ---------- 99,490 ---------- SHARES VALUE --------- ----------- EQUIPMENT (SEMICONDUCTORS)--0.7% FEI Co. (b) ..................................... 800 $ 25,208 ---------- FINANCIAL (DIVERSIFIED)--2.9% Ambac Financial Group, Inc. ..................... 700 40,502 Odyssey Re Holdings Corp. ....................... 3,800 67,260 ---------- 107,762 ---------- FOOTWEAR--0.9% NIKE, Inc. Class B .............................. 600 33,744 ---------- HARDWARE & TOOLS--1.1% Stanley Works (The) ............................. 900 41,913 ---------- HEALTH CARE (GENERIC AND OTHER)--0.2% Watson Pharmaceuticals, Inc. (b) ................ 200 6,278 ---------- HEALTH CARE (MANAGED CARE)--1.3% First Health Group Corp. (b) .................... 1,000 24,740 WellPoint Health Networks, Inc. (b) ............. 200 23,370 ---------- 48,110 ---------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--3.0% Apogent Technologies, Inc. (b) .................. 2,900 74,820 St. Jude Medical, Inc. (b) ...................... 500 38,825 ---------- 113,645 ---------- HEALTH CARE (SPECIALIZED SERVICES)--2.4% Laboratory Corporation of America Holdings (b) .. 300 24,255 Quest Diagnostics, Inc. (b) ..................... 900 64,539 ---------- 88,794 ---------- HOUSEHOLD PRODUCTS (NON-DURABLE)--2.2% Clorox Co. (The) ................................ 1,100 43,505 Dial Corp. (The) ................................ 2,300 39,445 ---------- 82,950 ---------- HOUSEWARES--1.0% Newell Rubbermaid, Inc. ......................... 1,400 38,598 ---------- INSURANCE (PROPERTY-CASUALTY)--1.0% MGIC Investment Corp. ........................... 600 37,032 ---------- LEISURE TIME (PRODUCTS)--1.9% Brunswick Corp. ................................. 1,700 36,992 Mattel, Inc. .................................... 2,100 36,120 ---------- 73,112 ---------- MACHINERY (DIVERSIFIED)--1.6% Dover Corp. ..................................... 1,600 59,312 ---------- MANUFACTURING (DIVERSIFIED)--2.2% ITT Industries, Inc. ............................ 700 35,350 Parker-Hannifin Corp. ........................... 1,000 45,910 ---------- 81,260 ---------- MANUFACTURING (SPECIALIZED)--2.3% Diebold,Inc ..................................... 900 36,396 Fisher Scientific International, Inc. (b) ....... 200 5,840 Millipore Corp. ................................. 700 42,490 ---------- 84,726 ---------- METAL FABRICATORS--1.1% Kennametal, Inc. ................................ 1,000 40,270 ---------- OFFICE EQUIPMENT & SUPPLIES--1.6% Miller (Herman), Inc. ........................... 2,500 59,150 See Notes to Financial Statements 16 PHOENIX-AIM MID-CAP EQUITY SERIES SHARES VALUE -------- ---------- OIL & GAS (DRILLING & EQUIPMENT)--4.0% BJ Services Co. (b) ............................. 1,500 $ 48,675 Cooper Cameron Corp. (b) ........................ 700 28,252 Noble Drilling Corp. (b) ........................ 1,100 37,444 Weatherford International, Inc. (b) ............. 1,000 37,260 ---------- 151,631 ---------- OIL & GAS (EXPLORATION & PRODUCTION)--0.6% Noble Affiliates, Inc. .......................... 600 21,174 ---------- OIL & GAS (REFINING & MARKETING)--0.7% Valero Energy Corp. ............................. 700 26,684 ---------- PAPER & FOREST PRODUCTS--1.0% Louisiana-Pacific Corp. (b) ..................... 4,500 37,980 ---------- PERSONAL CARE--1.0% Avon Products,Inc ............................... 800 37,200 ---------- PHOTOGRAPHY/IMAGING--1.5% Zebra Technologies Corp. Class A (b) ............ 1,000 55,510 ---------- RESTAURANTS--2.0% Jack in the Box, Inc. (b) ....................... 1,300 35,802 Outback Steakhouse, Inc. (b) .................... 1,100 37,675 ---------- 73,477 RETAIL (DISCOUNTERS)--0.9% Family Dollar Stores, Inc. ...................... 1,100 32,978 ---------- RETAIL (SPECIALTY)--0.5% Barnes & Noble, Inc. (b) ........................ 700 20,720 ---------- SAVINGS & LOAN COMPANIES--0.7% Sovereign Bancorp, Inc. ......................... 2,300 28,152 ---------- SERVICES (COMMERCIAL & CONSUMER)--4.5% Block (H&R), Inc. ............................... 1,300 58,110 Convergys Corp. (b) ............................. 1,800 67,482 IMS Health, Inc. ................................ 2,200 42,922 ---------- 168,514 ---------- SERVICES (DATA PROCESSING)--2.0% Ceridian Corp. (b) .............................. 4,000 75,000 ---------- WASTE MANAGEMENT--1.6% Republic Services, Inc. (b) ..................... 3,000 59,910 ---------- TOTAL COMMON STOCKS (Identified cost $2,728,384) .............................. 2,937,904 ---------- FOREIGN COMMON STOCKS--3.2% HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--1.1% Teva Pharmaceutical Industries Ltd. ADR (Israel) 700 43,141 ---------- INSURANCE (PROPERTY-CASUALTY)--1.0% XL Capital Ltd. Class A (Bermuda) ............... 400 36,544 ---------- MACHINERY (DIVERSIFIED)--1.1% Mettler-Toledo International, Inc. (Switzerland) (b) ............................... 800 41,480 ---------- TOTAL FOREIGN COMMON STOCKS (Identified cost $119,375) ................................ 121,165 ---------- TOTAL LONG-TERM INVESTMENTS--81.5% (Identified cost $2,847,759) .............................. 3,059,069 ---------- PAR VALUE (000) VALUE ----- ---------- SHORT-TERM OBLIGATIONS--20.5% FEDERAL AGENCY SECURITIES--20.5% FHLB Discount Note 1.47%, 1/2/02 ................ $ 769 $ 768,969 ---------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $768,968) ................................ 768,969 ---------- TOTAL INVESTMENTS--102.0% (Identified cost $3,616,727) .............................. 3,828,038(a) Other assets and liabilities, net--(2.0)% ................. (75,963) NET ASSETS--100.0% .......................................... $3,752,075 ========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $249,605 and gross depreciation of $38,294 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $3,616,727. (b) Non-income producing. See Notes to Financial Statements 17 PHOENIX-AIM MID-CAP EQUITY SERIES
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $3,616,727) ......... $3,828,038 Cash ................................................................ 115 Receivables Investment securities sold ........................................ 66,302 Receivable from adviser ........................................... 14,977 Fund shares sold .................................................. 8,399 Dividends and interest ............................................ 1,280 ---------- Total assets .................................................... 3,919,111 ---------- LIABILITIES Payables Investment securities purchased ................................... 135,717 Fund shares repurchased ........................................... 51 Professional fee .................................................. 17,824 Financial agent fee ............................................... 3,215 Trustees' fee ..................................................... 1,266 Accrued expenses .................................................... 8,963 ---------- Total liabilities ............................................... 167,036 ---------- NET ASSETS .......................................................... $3,752,075 ========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest .................. $3,534,355 Undistributed net investment income ............................... 918 Accumulated net realized gain ..................................... 5,491 Net unrealized appreciation ....................................... 211,311 ---------- NET ASSETS .......................................................... $3,752,075 ========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ........................................... 352,131 ========== Net asset value and offering price per share ........................ $10.66 ======
STATEMENT OF OPERATIONS FROM INCEPTION OCTOBER 29, 2001 TO DECEMBER 31, 2001 INVESTMENT INCOME Dividends ......................................................... $ 4,138 Interest .......................................................... 2,914 Foreign tax withheld .............................................. (6) -------- Total investment income ......................................... 7,046 -------- EXPENSES Investment advisory fee ........................................... 4,961 Financial agent fee ............................................... 6,637 Professional ...................................................... 17,824 Printing .......................................................... 6,636 Custodian ......................................................... 3,314 Trustees .......................................................... 1,266 Miscellaneous ..................................................... 967 -------- Total expenses .................................................. 41,605 Less expenses borne by investment adviser ....................... (35,477) -------- Net expenses .................................................... 6,128 -------- NET INVESTMENT INCOME ............................................... 918 -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities ................................... 5,491 Net change in unrealized appreciation (depreciation) on investments 211,311 -------- NET GAIN ON INVESTMENTS ............................................. 216,802 -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................ $217,720 ========
See Notes to Financial Statements 18 PHOENIX-AIM MID-CAP EQUITY SERIES STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION 10/29/01 TO 12/31/01 --------------- FROM OPERATIONS Net investment income (loss) ........................................................... $ 918 Net realized gain (loss) ............................................................... 5,491 Net change in unrealized appreciation (depreciation) ................................... 211,311 ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 217,720 ---------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (353,886 shares) ......................................... 3,552,216 Cost of shares repurchased (1,755 shares) .............................................. (17,861) ---------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS .............................. 3,534,355 ---------- NET INCREASE (DECREASE) IN NET ASSETS .................................................. 3,752,075 NET ASSETS Beginning of period .................................................................... -- ---------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $918) ........... $3,752,075 ==========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
FROM INCEPTION 10/29/01 TO 12/31/01 -------------- Net asset value, beginning of period ..................................................... $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ........................................................... --(4) Net realized and unrealized gain (loss) ................................................ 0.66 ------ TOTAL FROM INVESTMENT OPERATIONS ..................................................... 0.66 ------ CHANGE IN NET ASSET VALUE ................................................................ 0.66 ------ NET ASSET VALUE, END OF PERIOD ........................................................... $10.66 ====== Total return ........................................................................... 6.55%(3) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) .................................................. $3,752 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) .................................................................. 1.05%(2) Net investment income .................................................................. 0.16%(2) Portfolio turnover rate .................................................................. 12%(3) (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 7.13% for the period ended December 31, 2001. (2) Annualized. (3) Not annualized. (4) Amount is less than $0.01.
See Notes to Financial Statements 19 PHOENIX-ALLIANCE/BERNSTEIN GROWTH + VALUE SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking to benefit from long-term capital growth. INVESTMENT ADVISER'S REPORT From its inception in late October through the end of the year, the Fund gained 7.03%, slightly outperforming the S&P 500 Index gain of 6.77%(1). The fourth-quarter market rally reflects increasing optimism about the economy and the outlook for technology in particular. Credit spreads have come down materially from the recessionary levels reached after September 11th and the stock market has retraced most of its post-attack losses. Although we are somewhat more optimistic than many observers on the economy overall, we don't allow macroeconomics to drive our bottom-up stock selection process--and we don't put all our eggs in one basket. While we overweight the pro-cyclical financial services, industrial commodities and retail industries, we are underweight the highly cyclical tech sector. These major themes are discussed below. INDUSTRIAL COMMODITIES & ENERGY Furthermore, we have emphasized companies that are positioned to withstand an economic downturn, if required, and to rally sharply if the economy improves, as we expect. Industrial commodities and energy producers are a prime example. Starved of capital during the technology boom, these companies were forced to restrain capacity growth even when their earnings were strong. As a result, they have done unusually well in the economic downturn, and should enjoy sharply rising product prices and earnings when demand rises in an economic recovery. Our holdings in these sectors, such as Dow Chemical, International Paper, and Occidental Petroleum, have outperformed in this market environment. RETAILERS Our retailers have also done remarkably well in the face of a weakening economy. One growth-oriented retailer that fits this bill is Kohl's, a Milwaukee-based retailer of discount-priced, name-brand clothes and home furnishings. The company has managed to sustain its superior earnings growth despite the onset of recession. Its strong management team has continuously expanded gross margins. These traits, coupled with its market leadership and ability to finance its own growth, make it an ideal retail growth investment. FINANCIALS Unlike other pro-cyclical groups, banks trailed in the fourth quarter on investor fears that credit losses would rise in a weak economy, damaging earnings and capital strength. Bernstein research indicates that credit losses are likely to rise in 2002, because they are a lagging indicator of economic performance, but that they will be contained. Unlike in prior bubbles, banks did not finance the excesses of the tech boom. Absent another significant move downward in the economy, loan losses and increased provisions are likely to be moderate. Given the industry's strong capital ratios--they are far higher than at this point in the last recession--we think the industry is well positioned to absorb its loan losses, particularly since the steep yield curve has improved interest margins for most institutions. Many of our value-oriented bank holdings are consumer-oriented super-regional banks such as Bank of America, Bank One and Wachovia. In addition, we hold two large, well-capitalized thrifts, Washington Mutual and Golden West. While many banks traded off on fears of credit losses, credit risk is not as signficant for these thrifts because they focus on mortgage lending, which has much lower loss ratios. We also own Citigroup, the world's largest financial services firm with diverse product line that includes traditional lending, credit cards, investment management, investment banking, and brokerage services in more than 100 countries. This diversity offers a wealth of cross-selling opportunities. TECHNOLOGY The pro-cyclical sector that rallied most dramatically in the fourth quarter was technology, which we underweight. Investors appear to be bidding up these stocks on hopes that the industry has reached the bottom of its cycle. That may well be right. However, large overcapacity still exists in many industry segments, so it will be years before aggregate sales and earnings climb back to recent peaks. As such, these stocks in aggregate seem to be priced above their fundamentals. Relative to its own history, the sector is expensive on price-to-sales basis. (1) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance. The index is not available for direct investment. Returns indicate past performance, which is not predictive of future performance. 20 PHOENIX-ALLIANCE/BERNSTEIN GROWTH + VALUE SERIES Within the technology sector, however, we see several very attractive investment opportunities, including Tellabs, Hewlett-Packard and Dell. While we own Hewlett-Packard primarily because of the value in its highly profitable printer and inkjet business, we own Dell for its growing market share in PCs and servers and resilience in the face of the downturn. OUTLOOK The US equity risk premium--the potential premium investors get for investing in US equities instead of bonds--is now near its highest level in several years and close to its historical norm. This does not necessarily mean equities will rally in the near term, but it does give us confidence that US large-cap stocks should provide solid returns over the next five years, at least compared to the current low level of interest rates. We expect annual equity returns in the high single digits--considerably below the returns investors enjoyed in the 1980s and 1990s, but a lot better than they've received in the last two years. 21 PHOENIX-ALLIANCE/BERNSTEIN GROWTH + VALUE SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE --------- ---------- COMMON STOCKS--90.8% AUTO PARTS & EQUIPMENT--1.2% Genuine Parts Co. ............................... 1,200 $ 44,040 ---------- BANKS (MAJOR REGIONAL)--2.7% Bank One Corp. .................................. 1,100 42,955 FleetBoston Financial Corp. ..................... 800 29,200 National City Corp. ............................. 900 26,316 ---------- 98,471 ---------- BANKS (MONEY CENTER)--3.4% Bank of America Corp. ........................... 1,400 88,130 Wachovia Corp. .................................. 1,200 37,632 ---------- 125,762 ---------- BROADCASTING (TELEVISION, RADIO & CABLE)--1.0% Comcast Corp. Class A (b) ....................... 1,000 36,000 ---------- CHEMICALS--2.8% Dow Chemical Co. (The) .......................... 1,700 57,426 Du Pont (E.I.) de Nemours & Co. ................. 1,100 46,761 ---------- 104,187 ---------- COMMUNICATIONS EQUIPMENT--0.8% Tellabs, Inc. (b) ............................... 1,900 28,424 COMPUTERS (HARDWARE)--3.6% Dell Computer Corp. (b) ......................... 700 19,026 Hewlett-Packard Co. ............................. 3,000 61,620 International Business Machines Corp. ........... 450 54,432 ---------- 135,078 ---------- COMPUTERS (SOFTWARE & SERVICES)--2.5% Microsoft Corp. (b) ............................. 1,400 92,750 ---------- DISTRIBUTORS (FOOD & HEALTH)--1.1% Cardinal Health, Inc. ........................... 625 40,412 ---------- ELECTRIC COMPANIES--3.2% Ameren Corp. .................................... 600 25,380 American Electric Power Co., Inc. ............... 1,500 65,295 Cinergy Corp. ................................... 800 26,744 ---------- 117,419 ---------- ELECTRICAL EQUIPMENT--3.5% General Electric Co. ............................ 2,700 108,216 Solectron Corp. (b) ............................. 2,000 22,560 ---------- 130,776 ---------- ELECTRONICS (SEMICONDUCTORS)--0.5% Intel Corp. ..................................... 600 18,870 ---------- ENTERTAINMENT--4.0% AOL Time Warner, Inc. (b) ....................... 2,600 83,460 Viacom, Inc. Class B (b) ........................ 1,500 66,225 ---------- 149,685 FINANCIAL (DIVERSIFIED)--6.6% Citigroup, Inc. ................................. 2,200 111,056 Freddie Mac ..................................... 1,700 111,180 Morgan Stanley Dean Witter & Co. ................ 400 22,376 ---------- 244,612 ---------- HEALTH CARE (DIVERSIFIED)--0.6% Johnson & Johnson ............................... 400 23,640 ---------- SHARES VALUE --------- ---------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--5.1% Pfizer, Inc. .................................... 2,600 $ 103,610 Pharmacia Corp. ................................. 2,000 85,300 ---------- 188,910 ---------- HEALTH CARE (MANAGED CARE)--3.9% CIGNA Corp. ....................................... 500 46,325 UnitedHealth Group, Inc. ........................ 1,400 99,078 ---------- 145,403 ---------- HOUSEHOLD FURNISHINGS & APPLIANCES--1.7% Leggett & Platt, Inc. ........................... 1,100 25,300 Whirlpool Corp. ................................. 500 36,665 ---------- 61,965 ---------- INSURANCE (MULTI-LINE)--1.1% American International Group, Inc. .............. 500 39,700 ---------- INSURANCE (PROPERTY-CASUALTY)--1.5% Allstate Corp. (The) .............................. 1,700 57,290 ---------- INVESTMENT BANKING/BROKERAGE--2.4% Goldman Sachs Group, Inc. (The) ................. 250 23,188 Lehman Brothers Holdings, Inc. .................. 800 53,440 Merrill Lynch & Co., Inc. ....................... 250 13,030 ---------- 89,658 ---------- MANUFACTURING (DIVERSIFIED)--3.9% Eaton Corp. ..................................... 400 29,764 Parker-Hannifin Corp. ........................... 600 27,546 Tyco International Ltd. ......................... 1,500 88,350 ---------- 145,660 ---------- OIL (DOMESTIC INTEGRATED)--5.8% Amerada Hess Corp. .............................. 600 37,500 Conoco, Inc. .................................... 900 25,470 Occidental Petroleum Corp. ...................... 3,500 92,855 Phillips Petroleum Co. .......................... 1,000 60,260 ---------- 216,085 ---------- PAPER & FOREST PRODUCTS--1.9% Georgia-Pacific Corp. ........................... 800 22,088 International Paper Co. ......................... 400 16,140 Smurfit-Stone Container Corp. (b) ............... 2,000 31,940 ---------- 70,168 ---------- PUBLISHING (NEWSPAPERS)--0.4% New York Times Co. (The) Class A ................ 300 12,975 ---------- RAILROADS--3.0% Burlington Northern Santa Fe Corp. .............. 2,900 82,737 Union Pacific Corp. ............................. 500 28,500 ---------- 111,237 ---------- RETAIL (BUILDING SUPPLIES)--2.2% Home Depot, Inc. (The) .......................... 1,600 81,616 ---------- RETAIL (COMPUTERS & ELECTRONICS)--0.4% Tech Data Corp. (b) ............................. 300 12,984 ---------- RETAIL (DEPARTMENT STORES)--3.7% Federated Department Stores, Inc. (b) ........... 600 24,540 Kohl's Corp. (b) ................................ 1,600 112,704 ---------- 137,244 ---------- RETAIL (DRUG STORES)--1.8% Walgreen Co. .................................... 2,000 67,320 ---------- See Notes to Financial Statements 22 PHOENIX-ALLIANCE/BERNSTEIN GROWTH + VALUE SERIES SHARES VALUE --------- ---------- RETAIL (GENERAL MERCHANDISE)--1.9% Sears, Roebuck and Co. .......................... 800 $ 38,112 Target Corp. .................................... 800 32,840 ---------- 70,952 ---------- SAVINGS & LOAN COMPANIES--3.4% Golden West Financial Corp. ..................... 1,000 58,850 Washington Mutual, Inc. ......................... 2,000 65,400 ---------- 124,250 SERVICES (COMPUTER SYSTEMS)--2.0% Electronic Data Systems Corp. ................... 1,100 75,405 ---------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)--3.4% AT&T Wireless Services, Inc. (b) ................ 7,000 100,590 Sprint Corp. (PCS Group) (b) .................... 1,100 26,851 ---------- 127,441 ---------- TELECOMMUNICATIONS (LONG DISTANCE)--1.9% WorldCom, Inc. - WorldCom Group (b) ............. 4,900 68,992 ---------- TELEPHONE--0.8% Qwest Communications International, Inc. ........ 2,000 28,260 ---------- TEXTILES (APPAREL)--0.6% Jones Apparel Group, Inc. (b) ................... 700 23,219 ---------- TOBACCO--0.5% Philip Morris Cos., Inc. ........................ 400 18,340 ---------- TOTAL COMMON STOCKS (Identified cost $3,199,753) .............................. 3,365,200 ---------- FOREIGN COMMON STOCKS--5.6% AUTO PARTS & EQUIPMENT--1.0% Magna International, Inc. Class A (Canada) ...... 600 38,082 ---------- COMMUNICATIONS EQUIPMENT--2.1% Nokia Oyj ADR (Finland) ......................... 3,100 76,043 ---------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)--2.5% Vodafone Group plc ADR (United Kingdom) ......... 3,600 92,448 ---------- TOTAL FOREIGN COMMON STOCKS (Identified cost $189,361) ................................ 206,573 ---------- TOTAL LONG-TERM INVESTMENTS--96.4% (Identified cost $3,389,114) .............................. 3,571,773 ---------- PAR VALUE (000) VALUE ----- ---------- SHORT-TERM OBLIGATIONS--4.5% MONEY MARKET MUTUAL FUNDS--4.5% SSgA Money Market Fund (1.89% seven day effective yield) .............................. $ 169 $ 169,214 ---------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $169,214) ................................ 169,214 ---------- TOTAL INVESTMENTS--100.9% (Identified Cost $3,558,328) .............................. 3,740,987(a) Other assets and liabilities, net--(0.9)% ................. (34,138) NET ASSETS--100.0% ................................ ......... $3,706,849 ========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $213,756 and gross depreciation of $31,097 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $3,558,328. (b) Non-income producing. See Notes to Financial Statements 23 PHOENIX-ALLIANCE/BERNSTEIN GROWTH + VALUE SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001
ASSETS Investment securities at value (Identified cost $3,558,328) ......... $3,740,987 Receivables Fund shares sold .................................................. 34,658 Receivable from adviser ........................................... 14,899 Dividends and interest ............................................ 4,461 ---------- Total assets .................................................... 3,795,005 ---------- LIABILITIES Payables Investment securities purchased ................................... 56,808 Fund shares repurchased ........................................... 115 Professional fee .................................................. 17,824 Printing fee ...................................................... 6,623 Financial agent fee ............................................... 3,197 Trustees' fee ..................................................... 1,266 Accrued expenses .................................................... 2,323 ---------- Total liabilities ............................................... 88,156 ---------- NET ASSETS .......................................................... $3,706,849 ========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest .................. $3,525,133 Accumulated net realized loss ..................................... (943) Net unrealized appreciation ....................................... 182,659 ---------- NET ASSETS .......................................................... $3,706,849 ========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ........................................... 346,722 ========== Net asset value and offering price per share ........................ $10.69 ======
STATEMENT OF OPERATIONS FROM INCEPTION OCTOBER 29, 2001 TO DECEMBER 31, 2001 INVESTMENT INCOME Dividends ......................................................... $ 8,237 Interest .......................................................... 1,175 Foreign taxes withheld ............................................ (47) -------- Total investment income ......................................... 9,365 -------- EXPENSES Financial agent fee ............................................... 6,581 Investment advisory fee ........................................... 4,297 Professional ...................................................... 17,824 Printing .......................................................... 6,636 Custodian ......................................................... 2,555 Trustees .......................................................... 1,266 Miscellaneous ..................................................... 951 -------- Total expenses .................................................. 40,110 Less expenses borne by investment adviser ....................... (34,802) -------- Net expenses .................................................... 5,308 -------- NET INVESTMENT INCOME ............................................... 4,057 -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ................................... (943) Net change in unrealized appreciation (depreciation) on investments 182,659 -------- NET GAIN ON INVESTMENTS ............................................. 181,716 -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................ $185,773 ========
See Notes to Financial Statements 24 PHOENIX-ALLIANCE/BERNSTEIN GROWTH + VALUE SERIES STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION 10/29/01 TO 12/31/01 -------------- FROM OPERATIONS Net investment income (loss) ........................................................................ $ 4,057 Net realized gain (loss) ............................................................................ (943) Net change in unrealized appreciation (depreciation) ................................................ 182,659 ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ......................................... 185,773 ---------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ............................................................................... (4,117) ---------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ........................................... (4,117) ---------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (346,666 shares) ...................................................... 3,524,549 Net asset value of shares issued from reinvestment of distributions (384 shares) .................... 4,117 Cost of shares repurchased (328 shares) ............................................................. (3,473) ---------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ........................................... 3,525,193 ---------- NET INCREASE (DECREASE) IN NET ASSETS ............................................................... 3,706,849 NET ASSETS Beginning of period ................................................................................. -- ---------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $0) .......................... $3,706,849 ==========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
FROM INCEPTION 10/29/01 TO 12/31/01 -------------- Net asset value, beginning of period .................................................................. $10.00 INCOME FROM INVESTMENT OPERATIONS (4) Net investment income (loss) ........................................................................ 0.01 Net realized and unrealized gain (loss) ............................................................. 0.69 ------ TOTAL FROM INVESTMENT OPERATIONS .................................................................. 0.70 ------ LESS DISTRIBUTIONS Dividends from net investment income ................................................................ (0.01) ------ TOTAL DISTRIBUTIONS ............................................................................... (0.01) ------ CHANGE IN NET ASSET VALUE ............................................................................. 0.69 ------ NET ASSET VALUE, END OF PERIOD ........................................................................ $10.69 ====== Total return .......................................................................................... 7.03%(3) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ............................................................... $3,707 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) ............................................................................... 1.05%(2) Net investment income ............................................................................... 0.80%(2) Portfolio turnover rate ............................................................................... 1%(3) (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 7.93% for the period ended December 31, 2001. (2) Annualized. (3) Not annualized. (4) Per share income from investment operations may vary from anticipated results depending on the timing of share purchases and redemptions.
See Notes to Financial Statements 25 PHOENIX-DEUTSCHE DOW 30 SERIES INVESTOR PROFILE This Fund is appropriate for an investor who seeks to track the total return of the Dow Jones Industrial Average before fund expenses. INVESTMENT ADVISER'S REPORT For the quarter, the Dow Jones Industrial Average1 was up 13.84% to a level of 10021.51 as equities rebounded strongly during the quarter from the lows set after the September 11th terrorist attacks on the World Trade Center and the Pentagon. For the year, however, compared with the Fund's negative return of 5.98%, the index was down 5.41% for the worst annual decline since 1974 and the first two-year decline since the mid-1970's. After the negative impact from the September 11th attacks and the almost unprecedented subsequent shutdown of US markets, equities started to rally on September 21. Stocks rallied as investors' worst fears for a sharp economic decline and continued negative sentiment did not appear to come to fruition. Even though the Federal Reserve cut interest rates 11 times throughout the year, in an attempt to encourage consumers and corporations to increase spending, the US economy slipped into a recession during the fourth quarter as the excesses of the late 1990's continued to weigh heavily on investors. The decline, which started last year with the end of the technology and telecommunication stock bubble, expanded to all sectors of the US economy during the year. The best sector performance came from Technology (up 26.77%) reversing the performance of last quarter followed by Capital Goods (up 21.26%). These two sectors accounted for over sixty percent of the performance this quarter. Sectors with negative performance were led by Communication Services (down 13.72%) and Health Care (down 3.36%). Technology related stocks showed the best performance for the quarter led by Intel (up 53.86%). Other strong components included United Technologies Corporation (up 38.99%) and Home Depot Inc. (up 32.94%). The worst performing issues included SBC Communications (down 16.87%) and Merck & Company (down 11.71%). [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Dow 30 Series Dow Jones Industrial Average(1) S&P 500 Index(2) 12/15/99 $10,000.00 $10,000.00 $10,000.00 12/31/99 10,251.90 10,250.10 10,400.00 12/29/00 9,681.75 9,772.97 9,444.51 12/31/01 9,102.63 9,243.77 8,322.99
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 12/15/99 TO 1 YEAR 12/31/01 - ---------------------------------------------------------------------------- Dow 30 Series (5.98)% (4.49)% - ---------------------------------------------------------------------------- Dow Jones Industrial Average(1) (5.41)% (3.77)% - ---------------------------------------------------------------------------- S&P 500 Index(2) (11.87)% (8.58)% - ---------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 12/15/99 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. (1) The Dow Jones Industrial Average is unmanaged and measures large-cap stock performance. (2) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 26 PHOENIX-DEUTSCHE DOW 30 SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE ------ ----------- COMMON STOCKS--92.4% AEROSPACE/DEFENSE--2.5% Boeing Co. (The) ................................ 15,104 $ 585,733 ALUMINUM--2.3% Alcoa, Inc. ..................................... 15,104 536,947 ----------- AUTOMOBILES--3.1% General Motors Corp. ............................ 15,104 734,054 ----------- BEVERAGES (NON-ALCOHOLIC)--3.0% Coca-Cola Co. (The) ............................. 15,104 712,154 ----------- CHEMICALS--2.7% Du Pont (E.I.) de Nemours & Co. ................. 15,104 642,071 ----------- COMPUTERS (HARDWARE)--9.0% Hewlett-Packard Co. ............................. 15,104 310,236 International Business Machines Corp. ........... 15,104 1,826,980 ----------- 2,137,216 ----------- COMPUTERS (SOFTWARE & SERVICES)--4.2% Microsoft Corp. (b) ............................. 15,104 1,000,640 ----------- ELECTRICAL EQUIPMENT--2.6% General Electric Co. ............................ 15,104 605,368 ----------- ELECTRONICS (SEMICONDUCTORS)--2.0% Intel Corp. ..................................... 15,104 475,021 ----------- ENTERTAINMENT--1.3% Walt Disney Co. (The) ........................... 15,104 312,955 ----------- FINANCIAL (DIVERSIFIED)--7.8% American Express Co. ............................ 15,104 539,062 Citigroup, Inc. ................................. 15,104 762,450 J.P. Morgan Chase & Co. ......................... 15,104 549,030 ----------- 1,850,542 ----------- HEALTH CARE (DIVERSIFIED)--3.8% Johnson & Johnson ............................... 15,104 892,646 ----------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--3.7% Merck & Co., Inc. ............................... 15,104 888,115 ----------- HOUSEHOLD PRODUCTS (NON-DURABLE)--5.0% Procter & Gamble Co. (The) ...................... 15,104 1,195,180 ----------- MACHINERY (DIVERSIFIED)--3.3% Caterpillar, Inc. ............................... 15,104 789,184 ----------- MANUFACTURING (DIVERSIFIED)--13.8% Honeywell International, Inc. ................... 15,104 510,817 Minnesota Mining and Manufacturing Co. .......... 15,104 1,785,444 United Technologies Corp. ....................... 15,104 976,172 ----------- 3,272,433 ----------- OIL (INTERNATIONAL INTEGRATED)--2.5% Exxon Mobil Corp. ............................... 15,104 593,587 ----------- SHARES VALUE ------ ----------- PAPER & FOREST PRODUCTS--2.6% International Paper Co. ......................... 15,104 $ 609,446 ----------- PHOTOGRAPHY/IMAGING--1.9% Eastman Kodak Co. ............................... 15,104 444,511 ----------- RESTAURANTS--1.7% McDonald's Corp. ................................ 15,104 399,803 ----------- RETAIL (BUILDING SUPPLIES)--3.3% Home Depot, Inc. (The) .......................... 15,104 770,455 ----------- RETAIL (GENERAL MERCHANDISE)--3.7% Wal-Mart Stores, Inc. ........................... 15,104 869,235 ----------- TELECOMMUNICATIONS (LONG DISTANCE)--1.2% AT&T Corp. ...................................... 15,104 273,987 ----------- TELEPHONE--2.5% SBC Communications, Inc. ........................ 15,104 591,624 ----------- TOBACCO--2.9% Philip Morris Cos., Inc. ........................ 15,104 692,518 ----------- TOTAL COMMON STOCKS (Identified cost $23,489,282) ............................. 21,875,425 ----------- UNIT INVESTMENT TRUSTS--3.6% Diamonds Trust, Series I ........................ 8,472 844,574 ----------- TOTAL UNIT INVESTMENT TRUSTS (Identified cost $845,302) ................................ . 844,574 ----------- TOTAL LONG-TERM INVESTMENTS--96.0% (Identified cost $24,334,584) ............................. 22,719,999 ----------- STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) ----------- ----- SHORT-TERM OBLIGATIONS--4.4% REPURCHASE AGREEMENTS--4.2% State Street Bank & Trust Co. repurchase agreement 0.25%, dated 12/31/01 due 1/2/02, repurchase price $993,014, collateralized by U.S. Treasury Note 6.50%, 11/15/26, market value $1,017,748 ......................... $993 993,000 U.S GOVERNMENT SECURITIES--0.2% U.S. Treasury Bill 0%, 3/21/02 (c) ... AAA 55 54,800 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $1,047,807) .............................. 1,047,800 ----------- TOTAL INVESTMENTS--100.4% (Identified cost $25,382,391) ............................. 23,767,799(a) Other assets and liabilities, net--(0.4)% ................. (83,466) ----------- NET ASSETS--100.0% .......................................... $23,684,333 =========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $1,610,756 and gross depreciation of $3,312,747 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $25,469,790. (b) Non-income producing. (c) All or a portion segregated as collateral for futures contracts. See Notes to Financial Statements 27 PHOENIX-DEUTSCHE DOW 30 SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $25,382,391) ....................................... $23,767,799 Cash ............................................................................................... 540 Receivables Fund shares sold ................................................................................. 113,663 Dividends and interest ........................................................................... 20,895 Receivable from adviser .......................................................................... 3,534 Prepaid expenses ................................................................................... 166 ----------- Total assets ................................................................................... 23,906,597 ----------- LIABILITIES Payables Investment securities purchased .................................................................. 135,944 Fund shares repurchased .......................................................................... 15,100 Professional fee ................................................................................. 27,549 Printing fee ..................................................................................... 17,769 Variation margin from future contracts ........................................................... 12,960 Financial agent fee .............................................................................. 4,454 Trustees' fee .................................................................................... 3,262 Accrued expenses ................................................................................... 5,226 ----------- Total liabilities .............................................................................. 222,264 ----------- NET ASSETS ......................................................................................... $23,684,333 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................................. $25,336,368 Undistributed net investment income .............................................................. 7,390 Accumulated net realized loss .................................................................... (44,951) Net unrealized depreciation ...................................................................... (1,614,474) ----------- NET ASSETS ......................................................................................... $23,684,333 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization .......................................................................... 2,732,507 =========== Net asset value and offering price per share ....................................................... $8.67 =====
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends ........................................................................................ $ 336,836 Interest ......................................................................................... 6,131 ----------- Total investment income ........................................................................ 342,967 ----------- EXPENSES Investment advisory fee .......................................................................... 66,960 Financial agent fee .............................................................................. 51,355 Professional ..................................................................................... 29,502 Printing ......................................................................................... 23,584 Custodian ........................................................................................ 14,294 Trustees ......................................................................................... 8,437 Miscellaneous .................................................................................... 20,297 ----------- Total expenses ..................................................................................... 214,429 Less expenses borne by investment adviser ...................................................... (118,719) Custodian fees paid indirectly ................................................................. (53) ----------- Net expenses ................................................................................... 95,657 ----------- NET INVESTMENT INCOME .............................................................................. 247,310 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities .................................................................. 59,111 Net realized loss on futures contracts ........................................................... (22,600) Net change in unrealized appreciation (depreciation) on investments .............................. (1,225,559) ----------- NET LOSS ON INVESTMENTS ............................................................................ (1,189,048) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................................... $ (941,738) ===========
See Notes to Financial Statements 28 PHOENIX-DEUTSCHE DOW 30 SERIES STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ----------- ----------- FROM OPERATIONS Net investment income (loss) ................................................................. $ 247,310 $ 128,901 Net realized gain (loss) ..................................................................... 36,511 419,617 Net change in unrealized appreciation (depreciation) ......................................... (1,225,559) (504,411) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................................. (941,738) 44,107 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ........................................................................ (243,894) (125,001) Net realized short-term gains ................................................................ (187,932) (202,320) Net realized long-term gains ................................................................. (115,333) -- ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS .................................... (547,159) (327,321) ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (1,551,688 and 1,185,431 shares, respectively) ................. 13,567,385 11,115,022 Net asset value of shares issued from reinvestment of distributions (60,901 and 34,377 shares, respectively) .............................................................................. 547,159 327,321 Cost of shares repurchased (518,675 and 83,455 shares, respectively) ......................... (4,444,227) (799,084) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS .................................... 9,670,317 10,643,259 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS ........................................................ 8,181,420 10,360,045 NET ASSETS Beginning of period .......................................................................... 15,502,913 5,142,868 ----------- ----------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $7,390 AND $3,974, RESPECTIVELY) .............................................................................. $23,684,333 $15,502,913 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
YEAR ENDED DECEMBER 31, FROM INCEPTION ------------------------- 12/15/99 TO 2001 2000 12/31/99 ------ ------ -------------- Net asset value, beginning of period .... $ 9.46 $10.24 $10.00 INCOME FROM INVESTMENT OPERATIONS (4) Net investment income (loss) .......... 0.11(6) 0.08 0.01 Net realized and unrealized gain (loss) (0.66) (0.65) 0.24 ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .... (0.55) (0.57) 0.25 ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .. (0.10) (0.08) (0.01) Dividends from net realized gains ..... (0.14) (0.13) -- ------ ------ ------ TOTAL DISTRIBUTIONS ................. (0.24) (0.21) (0.01) ------ ------ ------ CHANGE IN NET ASSET VALUE ............... (0.79) (0.78) 0.24 ------ ------ ------ NET ASSET VALUE, END OF PERIOD .......... $ 8.67 $ 9.46 $10.24 ====== ====== ====== Total return ............................ (5.98)% (5.56)% 2.52%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ... $23,684 $15,503 $5,143 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ................ 0.50%(5) 0.50% 0.50%(1) Net investment income ................. 1.29% 1.08% 2.75%(1) Portfolio turnover rate ................. 38% 93% 1%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.12%, 1.60% and 7.81% for the periods ended December 31, 2001, 2000 and 1999, respectively. (4) Per share income from investment operations may vary from anticipated results depending on the timing of share purchases and redemptions. (5) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (6) Computed using average shares outstanding.
See Notes to Financial Statements 29 PHOENIX-DEUTSCHE NASDAQ-100 INDEX(R) SERIES INVESTOR PROFILE This Fund is appropriate for an investor who seeks to track the total return of the Nasdaq-100 Index(R) before fund expenses. INVESTMENT ADVISER'S REPORT For the quarter, the Nasdaq 100 Index1 was up a strong 34.98% to a level of 1577.05 as equities, especially technology related issues rebounded strongly during the quarter from the lows set after the September 11th terrorist attacks on the World Trade Center and the Pentagon. For the year, however, compared with the Fund's negative return of 33.04%, the index was down 32.65% as equities suffered through one of the worst periods since the mid-1970's. After the negative impact from the September 11th attacks and the almost unprecedented subsequent shutdown of US markets, equities started to rally on September 21. Stocks rallied as investors' worst fears for a sharp economic decline and continued negative sentiment did not appear to come to fruition. Even though the Federal Reserve cut interest rates 11 times throughout the year, in an attempt to encourage consumers and corporations to increase spending, the US economy slipped into recession during the fourth quarter as the excesses of the late 1990's continued to weigh heavily on investors. The decline, which started last year with the end of the technology and telecommunication stock bubble, expanded to all sectors of the US economy during the year. The best sector performance came from Technology (up 42.05%) reversing the performance of last quarter followed by Capital Goods (up 38.32%). With the Technology sector accounting for 68.5% of the index, the performance was attributable almost totally to the strong performance of technology issues. All sectors were in positive territory this quarter with Communication Services having the worst performance by way of only being up 4.61%. Technology related stocks showed the best performance for the quarter led by Network Appliances (up 221.62%). Other strong issues included Nvidia Corporation (up 143.54%) and Veritas Software (up 143.11%). The worst performing issues included Imclone Systems (down 17.84%) and Express Scripts (down 15.47%). At the annual rebalancing which took place December 24, thirteen new issues joined the index. These along with three additions, which were the result of corporate actions during the quarter, brought the total for the year to nineteen. This is comparable to the seventeen changes during all of 2000. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
NASDAQ-100 Index(R)Series NASDAQ-100 Index(1) S&P 500 Index(2) 8/15/00 $10,000.00 $10,000.00 $10,000.00 12/29/00 6,322.15 6,290.47 8,930.35 12/31/01 4,233.04 4,236.41 7,869.88
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 08/15/00 TO 1 YEAR 12/31/01 - -------------------------------------------------------------------------- NASDAQ-100 Index(R)Series (33.04)% (46.41)% - -------------------------------------------------------------------------- Nasdaq 100 Index(1) (32.65)% (46.38)% - -------------------------------------------------------------------------- S&P 500 Index(2) (11.87)% (15.96)% - -------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 08/15/00 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. (1) The Nasdaq 100 Index is unmanaged and measures technology-oriented stock total-return performance. (2) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 30 PHOENIX-DEUTSCHE NASDAQ-100 INDEX(R) SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE --------- ---------- COMMON STOCKS--92.5% BIOTECHNOLOGY--11.8% Abgenix, Inc. (b) ............................... 640 $ 21,530 Amgen, Inc. (b) ................................. 3,805 214,754 Biogen, Inc. (b) ................................ 1,419 81,380 Cephalon, Inc. (b) .............................. 362 27,362 Chiron Corp. (b) ................................ 2,066 90,573 Genzyme Corp. (b) ............................... 2,077 124,329 Gilead Sciences, Inc. (b) ....................... 738 48,501 Human Genome Sciences, Inc. (b) ................. 993 33,484 IDEC Pharmaceuticals Corp. (b) .................. 1,295 89,264 ImClone Systems, Inc. (b) ....................... 584 27,133 Immunex Corp. (b) ............................... 5,834 161,660 Invitrogen Corp. (b) ............................ 388 24,029 MedImmune, Inc. (b) ............................. 1,791 83,013 Millennium Pharmaceuticals, Inc. (b) ............ 1,907 46,740 Protein Design Labs, Inc. (b) ................... 660 21,648 ---------- 1,095,400 ---------- BROADCASTING (TELEVISION, RADIO & CABLE)--3.7% Adelphia Communications Corp. Class A (b) ....... 1,544 48,142 Charter Communications, Inc. Class A (b) ........ 2,388 39,235 Comcast Corp. Class A (b) ....................... 3,500 126,000 EchoStar Communications Corp. Class A (b) ....... 1,941 53,319 USA Networks, Inc. (b) .......................... 2,799 76,441 ---------- 343,137 ---------- COMMUNICATIONS EQUIPMENT--6.8% ADC Telecommunications, Inc. (b) ................ 7,696 35,402 CIENA Corp. (b) ................................. 3,033 43,402 Comverse Technology, Inc. (b) ................... 1,504 33,644 JDS Uniphase Corp. (b) .......................... 10,881 94,447 PanAmSat Corp. (b) .............................. 1,577 34,505 QUALCOMM, Inc. (b) .............................. 7,200 363,600 Tellabs, Inc. (b) ............................... 1,825 27,302 ---------- 632,302 ---------- COMPUTERS (HARDWARE)--5.5% Apple Computer, Inc. (b) ........................ 3,821 83,680 Brocade Communications Systems, Inc. (b) ........ 1,820 60,278 Dell Computer Corp. (b) ......................... 7,498 203,796 Juniper Networks, Inc. (b) ...................... 1,659 31,438 Sun Microsystems, Inc. (b) ...................... 11,012 135,448 ---------- 514,640 ---------- COMPUTERS (NETWORKING)--4.6% Cisco Systems, Inc. (b) ......................... 20,464 370,603 Network Appliance, Inc. (b) ..................... 2,704 59,136 ---------- 429,739 ---------- COMPUTERS (SOFTWARE & SERVICES)--24.4% Adobe Systems, Inc. ............................. 1,815 56,356 BEA Systems, Inc. (b) ........................... 2,878 44,321 Citrix Systems, Inc. (b) ........................ 1,742 39,474 Compuware Corp. (b) ............................. 1,791 21,116 eBay, Inc. (b) .................................. 1,602 107,174 Electronic Arts, Inc. (b) ....................... 1,079 64,686 i2 Technologies, Inc. (b) ....................... 3,536 27,934 Intuit, Inc. (b) ................................ 2,086 89,239 Mercury Interactive Corp. (b) ................... 688 23,378 Microsoft Corp. (b) ............................. 14,475 958,969 Oracle Corp. (b) ................................ 18,109 250,085 PeopleSoft, Inc. (b) ............................ 3,342 134,348 Rational Software Corp. (b) ..................... 1,584 30,888 Siebel Systems, Inc. (b) ........................ 4,229 118,328 Symantec Corp. (b) .............................. 559 37,079 SHARES VALUE --------- ---------- COMPUTERS (SOFTWARE & SERVICES)--CONTINUED Synopsys, Inc. (b) .............................. 432 $ 25,518 VeriSign, Inc. (b) .............................. 1,496 56,908 VERITAS Software Corp. (b) ...................... 3,200 143,456 Yahoo!, Inc. (b) ................................ 2,138 37,928 ---------- 2,267,185 ---------- DISTRIBUTORS (FOOD & HEALTH)--0.4% Andrx Group (b) ................................. 539 37,951 ---------- ELECTRICAL EQUIPMENT--1.2% Molex, Inc. ..................................... 762 23,584 Sanmina Corp. (b) ............................... 4,350 86,565 110,149 ---------- ELECTRONICS (SEMICONDUCTORS)--16.1% Altera Corp. (b) ................................ 4,231 89,782 Applied Micro Circuits Corp. (b) ................ 2,703 30,598 Atmel Corp. (b) ................................. 2,726 20,091 Broadcom Corp. Class A (b) ...................... 1,324 54,112 Conexant Systems, Inc. (b) ...................... 2,197 31,549 Integrated Device Technology, Inc. (b) .......... 773 20,554 Intel Corp. ..................................... 18,354 577,233 Linear Technology Corp. ......................... 3,304 128,988 Maxim Integrated Products, Inc. (b) ............. 3,534 185,570 Microchip Technology, Inc. (b) .................. 865 33,510 NVIDIA Corp. (b) ................................ 1,220 81,618 PMC-Sierra, Inc. (b) ............................ 1,426 30,317 QLogic Corp. (b) ................................ 738 32,848 RF Micro Devices, Inc. (b) ...................... 1,481 28,480 Vitesse Semiconductor Corp. (b) ................. 1,611 20,025 Xilinx, Inc. (b) ................................ 3,460 135,113 ---------- 1,500,388 ---------- EQUIPMENT (SEMICONDUCTORS)--2.8% Applied Materials, Inc. (b) ..................... 3,297 132,210 KLA-Tencor Corp. (b) ............................ 1,754 86,928 Novellus Systems, Inc. (b) ...................... 1,141 45,012 ---------- 264,150 ---------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--0.3% ICOS Corp. (b) .................................. 409 23,493 ---------- HEALTH CARE (GENERIC AND OTHER)--0.4% Sepracor Inc. (b) ............................... 613 34,978 ---------- HEALTH CARE (MANAGED CARE)--0.3% Express Scripts, Inc. (b) ....................... 552 25,811 ---------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--0.9% Biomet, Inc. .................................... 2,835 87,601 ---------- MEDICAL PRODUCTS & SUPPLIES--0.3% Cytyc Corp. (b) ................................. 956 24,952 ---------- PAPER & FOREST PRODUCTS--0.3% Smurfit-Stone Container Corp. (b) ............... 1,868 29,832 ---------- PUBLISHING--1.0% Gemstar-TV Guide International, Inc. (b) ........ 3,391 93,931 ---------- RESTAURANTS--0.8% Starbucks Corp. (b) ............................. 4,140 78,867 ---------- RETAIL (COMPUTERS & ELECTRONICS)--0.4% CDW Computer Centers, Inc. (b) .................. 693 37,221 ---------- RETAIL (GENERAL MERCHANDISE)--0.9% Costco Wholesale Corp. (b) ...................... 1,860 82,547 ---------- See Notes to Financial Statements 31 PHOENIX-DEUTSCHE NASDAQ-100 INDEX(R) SERIES SHARES VALUE --------- ---------- RETAIL (HOME SHOPPING)--0.2% Amazon.Com, Inc. (b) ............................ 1,928 $ 20,861 ---------- RETAIL (SPECIALTY)--1.6% Bed Bath & Beyond, Inc. (b) ..................... 3,046 103,259 Staples, Inc. (b) ............................... 2,418 45,217 ---------- 148,476 ---------- SERVICES (ADVERTISING/MARKETING)--0.4% TMP Worldwide, Inc. (b) ......................... 926 39,725 ---------- SERVICES (COMMERCIAL & CONSUMER)--1.3% Apollo Group, Inc. Class A (b) .................. 906 40,779 Cintas Corp. .................................... 1,590 76,320 ---------- 117,099 ---------- SERVICES (DATA PROCESSING)--3.4% Concord EFS, Inc. (b) ........................... 4,437 145,445 Fiserv, Inc. (b) ................................ 1,828 77,361 Paychex, Inc. ................................... 2,773 96,639 ---------- 319,445 ---------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.9% Nextel Communications, Inc. Class A (b) ......... 7,670 84,063 ---------- TELECOMMUNICATIONS (LONG DISTANCE)--1.3% WorldCom, Inc. - WorldCom Group (b) ............. 8,313 117,047 ---------- TRUCKS & PARTS--0.5% Paccar, Inc. .................................... 672 44,097 ---------- TOTAL COMMON STOCKS (Identified cost $11,340,380) ............................. 8,605,087 ---------- FOREIGN COMMON STOCKS--2.3% COMMUNICATIONS EQUIPMENT--0.4% Telefonaktiebolaget LM Ericsson AB ADR (Sweden) . 7,944 41,468 ---------- COMPUTERS (SOFTWARE & SERVICES)--0.8% Check Point Software Technologies Ltd. (Israel) (b) .................................... 1,858 74,115 ---------- ELECTRICAL EQUIPMENT--1.1% Flextronics International Ltd. (Singapore) (b) .. 4,124 98,935 ---------- TOTAL FOREIGN COMMON STOCKS (Identified cost $315,953) ................................ 214,518 ---------- UNIT INVESTMENT TRUSTS--2.7% Nasdaq-100 shares ............................... 6,473 251,865 ---------- TOTAL UNIT INVESTMENT TRUSTS (Identified cost $257,562) ................................ 251,865 ---------- TOTAL LONG-TERM INVESTMENTS--97.5% (Identified cost $11,913,895) ............................. 9,071,470 ---------- PAR VALUE (000) VALUE ----- ---------- SHORT-TERM OBLIGATIONS--2.7% REPURCHASE AGREEMENTS--2.0% State Street Bank & Trust Co. repurchase agreement, 0.25%, dated 12/31/01, repurchase price $186,003, collateralized by U.S. Treasury Bond 6.50%, 11/15/06, market value $191,512 ......................... $ 186 $ 186,000 ---------- STANDARD & POOR'S RATING (UNAUDITED) -------- U.S. GOVERNMENT SECURITIES--0.7% U.S. Treasury Bills 1.60%, 3/21/02 (c) .. AAA 65 64,763 ---------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $250,772) ...................... 250,763 ---------- TOTAL INVESTMENTS--100.2% (Identified cost $12,164,667) ................... 9,322,233(a) Other assets and liabilities, net--(0.2)% ....... (15,063) ---------- NET ASSETS--100.0% ................................ $9,307,170 ========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $595,562 and gross depreciation of $4,646,180 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $13,372,851. (b) Non-income producing. (c) All or portion segregated as collateral for futures contracts. See Notes to Financial Statements 32 PHOENIX-DEUTSCHE NASDAQ-100 INDEX(R) SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $12,164,667) ........ $ 9,322,233 Cash ................................................................ 962 Receivables Fund shares sold .................................................. 54,265 Investment securities sold ........................................ 28,015 Receivable from advisor ........................................... 9,190 Dividends and interest ............................................ 208 Prepaid expenses .................................................... 59 ----------- Total assets .................................................... 9,414,932 ----------- LIABILITIES Payables Investment securities purchased ................................... 52,965 Fund shares repurchased ........................................... 1,852 Professional fee .................................................. 25,359 Printing fee ...................................................... 8,696 Variation margin for future contracts ............................. 5,570 Financial agent fee ............................................... 3,557 Trustees' fee ..................................................... 3,262 Accrued expenses .................................................... 6,501 ----------- Total liabilities ................................................... 107,762 ----------- NET ASSETS .......................................................... $ 9,307,170 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest .................. $14,821,586 Accumulated net realized loss ..................................... (2,668,782) Net unrealized depreciation ....................................... (2,845,634) ----------- NET ASSETS .......................................................... $ 9,307,170 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ........................................... 2,198,698 =========== Net asset value and offering price per share ........................ $4.23 ===== STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends ......................................................... $ 3,745 Interest .......................................................... 2,983 Foreign taxes withheld ............................................ (39) ----------- Total investment income ......................................... 6,689 ----------- EXPENSES Financial agent fee ............................................... 41,709 Investment advisory fee ........................................... 24,381 Custodian ......................................................... 33,438 Professional ...................................................... 25,636 Printing .......................................................... 13,181 Trustees .......................................................... 8,437 Miscellaneous ..................................................... 16,823 ----------- Total expenses .................................................. 163,605 Less expenses borne by investment advisor ....................... (128,760) Custodian fees paid indirectly .................................. (18) ----------- Net expenses .................................................... 34,827 ----------- NET INVESTMENT LOSS ................................................. (28,138) ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ................................... (2,333,647) Net realized loss on futures contracts ............................ (81,750) Net change in unrealized appreciation (depreciation) on investments (447,931) ----------- NET LOSS ON INVESTMENTS ............................................. (2,863,328) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ................ $(2,891,466) ===========
See Notes to Financial Statements 33 PHOENIX-DEUTSCHE NASDAQ-100 INDEX(R) SERIES STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION YEAR ENDED 8/15/00 TO 12/31/01 12/31/00 ----------- -------------- FROM OPERATIONS Net investment income (loss) ................................................. $ (28,138) $ (6,360) Net realized gain (loss) ..................................................... (2,415,397) (253,385) Net change in unrealized appreciation (depreciation) ......................... (447,931) (2,397,703) ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .............. (2,891,466) (2,657,448) =========== =========== FROM SHARE TRANSACTIONS Proceeds from sales of shares (2,226,105 and 913,029 shares, respectively) ... 10,796,048 8,539,279 Cost of shares repurchased (899,721 and 40,715 shares, respectively) ......... (4,112,309) (366,934) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ...................... 6,683,739 8,172,345 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS ........................................ 3,792,273 5,514,897 NET ASSETS Beginning of period .......................................................... 5,514,897 -- ----------- ----------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF ($0 AND $0, RESPECTIVELY) ................................................. $ 9,307,170 $ 5,514,897 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
FROM INCEPTION YEAR ENDED 8/15/00 TO 12/31/01 12/31/00 ---------- -------------- Net asset value, beginning of period .......................................... $ 6.32 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ................................................ (0.02)(5) (0.01) Net realized and unrealized gain (loss) ..................................... (2.07) (3.67) ------ ------ TOTAL FROM INVESTMENT OPERATIONS .......................................... (2.09) (3.68) ------ ------ CHANGE IN NET ASSET VALUE ..................................................... (2.09) (3.68) ------ ------ NET ASSET VALUE, END OF PERIOD ................................................ $ 4.23 $ 6.32 ====== ====== Total return .................................................................. (33.04)% (36.78)%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ....................................... $9,307 $ 5,515 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ...................................................... 0.50%(4) 0.50%(1) Net investment income (loss) ................................................ (0.40)% (0.30)%(1) Portfolio turnover ............................................................ 91% 50%(2) (1) Annualized. (2) Not annualized. (3) If the investment advisor had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 2.35% and 3.93% for the periods ended December 31, 2001 and 2000, respectively. (4) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (5) Computed using average shares outstanding.
See Notes to Financial Statements 34 PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking investment in a diversified portfolio of real estate investment trusts and real estate operating companies. The Fund's objective is to emphasize appreciation and current yield equally. Investors should note that real estate investing involves certain risks, including refinancing, economic impact on the industry, changes in the value of properties owned, dependency on management skills, and liquidity risks similar to those associated with small-company investing. INVESTMENT ADVISER'S REPORT NAREIT PERIOD ENDED TOTAL RETURN 12/31/01 EQUITY INDEX(1) - ------------------------------------------------------------------------------ One-Year Return 6.62% 13.93% - ------------------------------------------------------------------------------ Three-Year Return 13.47% 11.15% - ------------------------------------------------------------------------------ Five-Year Return 7.04% 6.38% - ------------------------------------------------------------------------------ At the beginning of the year, we had concluded a strong record against our peers and benchmark. We attribute our value-added performance to our ground-up stock selection, style, and sector weightings. Our style combines a pursuit of growth AND value, and is sometimes referred to as GARP (growth at a reasonable price). As you may recall, we thought REITs could deliver double-digit returns as we stated in our report last year that with earnings growth of 7-8% projected for 2001 and a NAREIT Total Return Equity Index yield over 7%, these mature REITs could endure some multiple contraction and still deliver double-digit returns. This turned out to be the case, as the benchmark delivered a 13.93% return. By mid-year, those sectors and most of the names that had helped us perform so well in the prior two years were underperforming the benchmark. Investors sought high yield and smaller cap names among REITs as interest rates and the broader market came down. A meaningful portion of the top-performing REITs was pursued solely for yield, even though they lacked earnings growth, dividend growth, and dividend security. For example, the health-care REITs, which failed to meet our screens, delivered the best performance in the year, while delivering another year of negative earnings growth. One of the best performers even cut its dividend. The one-year forward multiples for health-care REITs started the year at 6.6x and finished the year at 9.6x, driven by the pursuit of yield, not its dividend coverage ratio. As we had expected, the economy continued to deteriorate, albeit faster than predicted, thus testing our fundamental hedge. In addition to focusing on good management teams, high quality assets, strong balance sheets, and markets with high barriers to entry, we had selected holdings with a favorable spread between market rents and in-place rents (loss-to-lease). Loss-to-lease positions usually allow landlords to preserve earnings growth as demand subsides. Last year we had said, "Expect us to remain overweight in the apartment, industrial, and office sectors, with a bias towards high barrier-to-entry markets and loss-to-lease positions." What we found, and quickly reacted to, was an accelerated decline in rent levels brought on by a strong occupancy battle in the office and apartment sectors. Our expectation for economic erosion had been accurate, but the rapidity was too much for the hedging tool we initially used. An earlier recognition that longer lease duration was a better hedging tool in such a rapid economic decline would have enhanced performance. We reacted by moving to overweight the retail sectors, focusing on regional malls and grocery-anchored shopping centers. These sectors have been and continue to be in the position to benefit from longer lease duration and additional interest expense savings. The source for these new positions came from our reduction in office and apartment holdings, which we reduced from an overweighting to an underweighted position and market weight, respectively. Our changes bore fruit as our results improved. 35 PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES OUTLOOK We continue to be positive in our outlook but want to limit return expectations to upper single- digits for the year, primarily driven by the 7.2% NAREIT Total Return Equity Index dividend as of December 31, 2001. Earnings growth for our REIT universe is expected to be 3%. We could see some earnings expansion in the retail REITs, if their interest expense savings is greater than assumed by management and the Street. Offsetting this potential upside is a downward bias on 2002 earnings in apartment and office REITs. As real estate is a lagging component of the economy, the shorter lease terms in these sectors could drive slightly greater occupancy declines than assumed. In addition, many of these companies have been building up significant amounts of capital to deploy in opportunities that may not come to fruition. As a result, we're not anticipating multiple expansion, which some argue is warranted given the record spread on the 7.2% dividend yield versus numerous fixed-income alternatives. We could also see more REITs added to the S&P 500 Index,2 but to date, the addition of two REITs has done little for either name. Diversification and longer lease duration continue to be themes of ours. We have increased the number of our holdings from 21 to 29. This trend is likely to continue. As stated above, we have moved to underweight office and market weight apartments, while reallocating that capital to regional malls and shopping centers. Both of these retail sectors offer longer lease duration and the opportunity to capitalize on more interest expense savings. In addition, we have reallocated our apartment holdings to include more companies with lower average monthly rental rates. The capital markets discipline we've talked about in the past has smoothed and lengthened the real estate cycle. In fact, banks are noting how well real estate loans are performing today. As the economy continues to slow, we're fortunate to be facing little new supply, and most landlords have very healthy balance sheets. As management teams sit on the sidelines with this capital, waiting for opportunities brought on by the economy, we will emphasize secure and attractive dividend yields and diversification of our holdings. We thank you for your interest in our Fund. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
NAREIT Total Return Real Estate Securities Series Equity Index(1) S&P 500 Index(2) 5/1/95 $10,000.00 $10,000.00 $10,000.00 12/29/95 11,779.20 11,548.00 12,184.40 12/31/96 15,677.20 15,618.30 15,016.90 12/31/97 19,133.70 18,787.20 20,028.90 12/31/98 15,078.60 15,499.00 25,788.60 12/31/99 15,798.70 14,783.50 31,239.00 12/29/00 20,660.90 18,680.20 28,369.00 12/31/01 22,028.10 21,282.80 25,000.20
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 5/1/95 TO 1 YEAR 5 YEAR 12/31/01 - ------------------------------------------------------------------------------ Real Estate Securities Series 6.62% 7.04% 12.56% - ------------------------------------------------------------------------------ NAREIT Total Return Equity Index(1) 13.93% 6.38% 11.97% - ------------------------------------------------------------------------------ S&P 500 Index(2) (11.87)% 10.73% 14.72% - ------------------------------------------------------------------------------ This chart assumes an initial gross investment of $10,000 made on 5/1/95 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. (1) The NAREIT Total Return Equity Index is unmanaged and measures the total-return performance of real estate investment trusts. (2) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 36 PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE -------- ----------- COMMON STOCKS--95.0% REAL ESTATE INVESTMENT TRUSTS--95.0% DIVERSIFIED--8.6% iStar Financial, Inc. .......................... 22,200 $ 553,890 Vornado Realty Trust ........................... 72,000 2,995,200 ----------- 3,549,090 ----------- INDUSTRIAL/OFFICE--30.9% INDUSTRIAL--10.2% CenterPoint Properties Corp. ................... 43,000 2,141,400 First Industrial Realty Trust, Inc. ............ 22,300 693,530 ProLogis Trust ................................. 64,700 1,391,697 ----------- 4,226,627 ----------- MIXED--4.7% Duke Realty Corp. .............................. 33,000 802,890 Reckson Associates Realty Corp. ................ 43,000 1,004,480 Reckson Associates Realty Corp. Class B ........ 6,500 165,815 ----------- 1,973,185 ----------- OFFICE--16.0% Alexandria Real Estate Equities, Inc. .......... 10,000 411,000 Boston Properties, Inc. ........................ 55,000 2,090,000 Equity Office Properties Trust ................. 91,910 2,764,653 SL Green Realty Corp. .......................... 44,750 1,374,272 ----------- 6,639,925 ----------- TOTAL INDUSTRIAL/OFFICE .................................... 12,839,737 ----------- RESIDENTIAL--20.3% APARTMENTS--20.3% Apartment Investment & Management Co. Class A .. 31,000 1,417,630 Archstone-Smith Trust .......................... 41,000 1,078,300 Avalonbay Communities, Inc. .................... 22,000 1,040,820 Camden Property Trust .......................... 35,500 1,302,850 Equity Residential Properties Trust ............ 49,400 1,418,274 Essex Property Trust, Inc. ..................... 19,000 938,790 United Dominion Realty Trust, Inc. ............. 85,000 1,224,000 ----------- 8,420,664 ----------- RETAIL--31.4% REGIONAL MALLS--14.0% CBL & Associates Properties, Inc. .............. 56,400 1,776,600 General Growth Properties, Inc. ................ 46,750 1,813,900 Simon Property Group, Inc. ..................... 62,250 1,825,793 Taubman Centers, Inc. .......................... 27,000 400,950 ----------- 5,817,243 ----------- SHOPPING CENTERS--17.4% Chelsea Property Group, Inc. ..................... 46,700 2,292,970 Kimco Realty Corp. ............................. 57,000 1,863,330 Pan Pacific Retail Properties, Inc. ............ 40,250 1,155,980 Realty Income Corp. ............................ 13,500 396,900 Weingarten Realty Investors .................... 31,000 1,488,000 ----------- 7,197,180 ----------- TOTAL RETAIL ............................................... 13,014,423 ----------- SHARES VALUE -------- ----------- SELF STORAGE--3.8% Public Storage, Inc. ........................... 47,500 $ 1,586,500 ----------- TOTAL REAL ESTATE INVESTMENT TRUSTS (Identified cost $35,212,535) ............................ 39,410,414 ----------- REAL ESTATE OPERATING COMPANIES--0.0% DIVERSIFIED--0.0% Vornado Operating, Inc. (b) .................... 3,110 1,555 ----------- TOTAL REAL ESTATE OPERATING COMPANIES (Identified cost $24,880) ................................ 1,555 ----------- TOTAL LONG-TERM INVESTMENTS--95.0% (Identified cost $35,212,378) ............................ 39,411,969 ----------- STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) ----------- ------ SHORT-TERM OBLIGATIONS--4.8% COMMERCIAL PAPER--4.8% Govco, Inc. 1.75%, 1/2/02 ....... A-1+ $2,000 1,999,903 TOTAL SHORT-TERM OBLIGATIONS (Identified cost $1,999,903) ............................. 1,999,903 ----------- TOTAL INVESTMENTS--99.8% (Identified Cost $37,212,281) ............................ 41,411,872(a) Other assets and liabilities, net--0.2% .................. 94,247 ----------- NET ASSETS--100.0% ......................................... $41,506,119 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $4,498,012 and gross depreciation of $298,421 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $37,212,281. (b) Non-income producing. See Notes to Financial Statements 37 PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $37,212,281) .................... $41,411,872 Receivables Dividends and interest ........................................................ 248,316 Fund shares sold .............................................................. 30,709 Prepaid expenses ................................................................ 302 ----------- Total assets ................................................................ 41,691,199 ----------- LIABILITIES Cash overdraft .................................................................. 508 Payables Fund shares repurchased ....................................................... 101,026 Printing fee .................................................................. 29,826 Professional fee .............................................................. 24,435 Investment advisory fee ....................................................... 18,715 Financial agent fee ........................................................... 5,698 Trustees' fee ................................................................. 3,262 Accrued expenses ................................................................ 1,610 ----------- Total liabilities ........................................................... 185,080 ----------- NET ASSETS ...................................................................... $41,506,119 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest .............................. $37,960,948 Undistributed net investment income ........................................... 181,071 Accumulated net realized loss ................................................. (835,491) Net unrealized appreciation ................................................... 4,199,591 ----------- NET ASSETS ...................................................................... $41,506,119 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ....................................................... 2,643,729 =========== Net asset value and offering price per share .................................... $15.70 ======
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001
INVESTMENT INCOME Dividends ..................................................................... $ 1,840,126 Interest ...................................................................... 99,141 ----------- Total investment income ..................................................... 1,939,267 ----------- EXPENSES Investment advisory fee ....................................................... 279,136 Financial agent fee ........................................................... 66,253 Printing ...................................................................... 35,926 Professional .................................................................. 26,708 Trustees ...................................................................... 8,437 Custodian ..................................................................... 8,421 Miscellaneous ................................................................. 7,896 ----------- Total expenses .............................................................. 432,777 Less expenses borne by investment adviser ................................... (60,219) Custodian fees paid indirectly .............................................. (375) ----------- Net expenses ................................................................ 372,183 ----------- NET INVESTMENT INCOME ........................................................... 1,567,084 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities ............................................... 2,031,162 Net change in unrealized appreciation (depreciation) on investments ........... (1,112,927) ----------- NET GAIN ON INVESTMENTS ......................................................... 918,235 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................ $ 2,485,319 ===========
See Notes to Financial Statements 38 PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ------------ ------------ FROM OPERATIONS Net investment income (loss) ........................................ $ 1,567,084 $ 1,371,873 Net realized gain (loss) ............................................ 2,031,162 534,489 Net change in unrealized appreciation (depreciation) ................ (1,112,927) 6,024,489 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ......... 2,485,319 7,930,851 ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ............................................... (1,533,702) (1,261,215) ------------ ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ........... (1,533,702) (1,261,215) ------------ ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (1,026,938 and 917,812 shares, respectively) ..................................................... 15,777,923 12,577,818 Net asset value of shares issued from reinvestment of distributions (100,085 and 89,365 shares, respectively) ......................... 1,533,702 1,261,215 Cost of shares repurchased (754,210 and 975,675 shares, respectively) (11,571,856) (13,043,694) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ........... 5,739,769 795,339 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ............................... 6,691,386 7,464,975 NET ASSETS Beginning of period ................................................. 34,814,733 27,349,758 ------------ ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $181,071 AND $154,718, RESPECTIVELY) .................... $ 41,506,119 $ 34,814,733 ============ ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
YEAR ENDED DECEMBER 31, -------------------------------------------------------------------------- 2001 2000 1999 1998 1997 ------ ------ ------ ------ ------ Net asset value, beginning of period ...... $15.33 $12.21 $12.28 $16.38 $14.32 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ............ 0.62 0.63 0.65 0.78 0.50 Net realized and unrealized gain (loss) . 0.37 3.07 (0.09) (4.20) 2.62 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ...... 0.99 3.70 0.56 (3.42) 3.12 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .... (0.62) (0.58) (0.63) (0.65) (0.48) Dividends from net realized gains ....... -- -- -- (0.02) (0.58) Tax return of capital ................... -- -- -- (0.01) -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS ................... (0.62) (0.58) (0.63) (0.68) (1.06) ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ................. 0.37 3.12 (0.07) (4.10) 2.06 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ............ $15.70 $15.33 $12.21 $12.28 $16.38 ====== ====== ====== ====== ====== Total return .............................. 6.62% 30.78% 4.78% (21.19)% 22.05% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ..... $41,506 $34,815 $27,350 $36,408 $54,659 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) ................... 1.00%(2) 1.00% 1.00% 1.00% 1.00% Net investment income ................... 4.21% 4.63% 5.06% 5.07% 3.59% Portfolio turnover rate ................... 37% 26% 28% 18% 41% (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.16%, 1.32%, 1.31%, 1.01 % and 1.07% for the periods ended December 31, 2001, 2000, 1999, 1998 and 1997, respectively. (2) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 39 PHOENIX-ENGEMANN CAPITAL GROWTH SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking intermediate and long-term capital appreciation with income as a secondary consideration through a diversified investment approach. INVESTMENT ADVISER'S REPORT For the fiscal year ended December 31, 2001, Phoenix-Engemann Capital Growth Series fell 34.57% versus a decline of 20.42% for the Russell 1000 Growth Index and a loss of 11.87% for the S&P 500 Index.(1) Given the slowdown in the economy, many of the traditional growth sectors experienced deterioration in business fundamentals, which negatively impacted stock performance. The magnitude of this downturn has been one of the most severe in history, and various growth cyclical sectors such as technology and telecommunications were hit inordinately hard. As a result, performance was significantly impacted by our investments in the technology and telecom sectors. With the continued deterioration in business fundamentals and earnings growth, many of the high growth companies also experienced compression in their valuations, which further affected their stock values. The first half of fiscal 2001 contributed to the bulk of the relative underperformance, as growth stocks experienced their worst performance as investors shifted towards more defensive sectors. As the deterioration in the profit outlook continued, we reduced our exposure to the technology and telecom sectors and diversified into other sectors that offer more defensive characteristics. Some of the industries that we diversified into included health-care services, specialty pharmaceuticals and generics, and defense electronics. In addition, the financial services sector has been an area of increased focus due to the Federal Reserve's continued action to reduce interest rates. OUTLOOK With a slowing economy and poor earnings outlook, the equity markets have been struggling to find some level of stability. After months of continued business fundamental deterioration, there seems to be some stabilization in several economic sectors. This stabilization, coupled with the enormous amount of monetary and fiscal stimulus being pushed through the financial system by the government, should lead to an eventual economic recovery. We believe the economy should experience healthy growth by the second half of 2002, resulting in a strong earnings and equity market recovery. In anticipation of the pending economic and earnings recovery, we have started to rotate the portfolio towards more cyclical sectors, such as technology, transportation, financial services, and business services. Within technology, we have added to our exposure in the semiconductor and semiconductor equipment industries. These industries have experienced a drastic slowdown due to the global recession in information technology equipment but are well poised, we believe, for a solid rebound in earnings growth. The technology sector should return to its traditional growth characteristics by the second half of 2002 and the outlook for 2003 is even more promising, in our view. We believe the other cyclical sectors, such as transportation and business services, should experience a healthy earnings recovery from their lows of 2001. (1) The Russell 1000 Growth Index measures large-cap, growth-oriented stock total return performance and is provided for general comparative purposes. The S&P 500 Index measures broad stock market total-return performance. The indices are unmanaged and not available for direct investment. 40 PHOENIX-ENGEMANN CAPITAL GROWTH SERIES [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Capital Growth Series S&P 500 Index(1) 12/31/91 $10,000.00 $10,000.00 12/31/92 11,028.90 10,769.10 12/31/93 13,200.90 11,846.00 12/30/94 13,396.20 12,002.70 12/29/95 17,528.40 16,504.60 12/31/96 19,733.40 20,341.50 12/31/97 23,891.80 27,130.70 12/31/98 31,062.20 34,932.50 12/31/99 40,279.20 42,315.50 12/29/00 33,120.20 38,427.90 12/31/01 21,669.60 33,864.70 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 1 YEAR 5 YEARS 10 YEARS - ------------------------------------------------------------------------ Capital Growth Series (34.57)% 1.89% 8.04% - ------------------------------------------------------------------------ S&P 500 Index(1) (11.87)% 10.73% 12.97% - ------------------------------------------------------------------------ This chart assumes an initial gross investment of $10,000 made on 12/31/91. Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. (1) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance. The index is not available for direct investment. 41 PHOENIX-ENGEMANN CAPITAL GROWTH SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE --------- ------------ COMMON STOCKS--88.7% AEROSPACE/DEFENSE--1.2% Northrop Grumman Corp. ......................... 115,000 $ 11,593,150 ------------ AIRLINES--0.7% Southwest Airlines Co. ........................... 347,000 6,412,560 ------------ BANKS (MAJOR REGIONAL)--1.0% Wells Fargo & Co. .............................. 207,100 8,998,495 ------------ BIOTECHNOLOGY--3.2% Amgen, Inc. (b) ................................ 102,500 5,785,100 IDEC Pharmaceuticals Corp. (b) ................. 210,000 14,475,300 MedImmune, Inc. (b) ............................ 209,000 9,687,150 ------------ 29,947,550 ------------ BROADCASTING (TELEVISION, RADIO & CABLE)--1.0% Liberty Media Corp. Class A (b) ................ 698,000 9,772,000 ------------ COMPUTERS (HARDWARE)--2.3% Brocade Communications Systems, Inc. (b) ......... 175,440 5,810,573 Sun Microsystems, Inc. (b) ..................... 1,240,900 15,263,070 ------------ 21,073,643 ------------ COMPUTERS (NETWORKING)--3.1% Cisco Systems, Inc. (b) ........................ 765,850 13,869,543 McDATA Corp. Class A (b) ....................... 628,007 15,386,172 ------------ 29,255,715 ------------ COMPUTERS (PERIPHERALS)--1.1% EMC Corp. (b) .................................. 762,950 10,254,048 ------------ COMPUTERS (SOFTWARE & SERVICES)--8.1% BEA Systems, Inc. (b) ............................ 1,523,850 23,467,290 i2 Technologies, Inc. (b) ...................... 181,820 1,436,378 Oracle Corp. (b) ............................... 1,045,400 14,436,974 PeopleSoft, Inc. (b) ........................... 207,000 8,321,400 Siebel Systems, Inc. (b) ....................... 175,100 4,899,298 VeriSign, Inc. (b) ............................. 286,500 10,898,460 VERITAS Software Corp. (b) ..................... 278,745 12,496,138 ------------ 75,955,938 ------------ DISTRIBUTORS (FOOD & HEALTH)--3.5% Andrx Group (b) ................................ 146,600 10,322,106 Cardinal Health, Inc. .......................... 347,000 22,437,020 ------------ 32,759,126 ------------ ELECTRICAL EQUIPMENT--1.1% Emerson Electric Co. ........................... 104,000 5,938,400 General Electric Co. ........................... 102,700 4,116,216 ------------ 10,054,616 ------------ ELECTRONICS (DEFENSE)--1.1% Raytheon Co. ................................... 314,000 10,195,580 ------------ ELECTRONICS (SEMICONDUCTORS)--10.0% Analog Devices, Inc. (b) ....................... 279,000 12,384,810 Applied Micro Circuits Corp. (b) ............... 136,620 1,546,538 Intersil Corp. (b) ............................. 138,700 4,473,075 Maxim Integrated Products, Inc. (b) ............ 349,000 18,325,990 Micron Technology, Inc. (b) .................... 140,000 4,340,000 Texas Instruments, Inc. ........................ 1,044,250 29,239,000 Xilinx, Inc. (b) ............................... 601,850 23,502,243 ------------ 93,811,656 ------------ SHARES VALUE --------- ------------ ENTERTAINMENT--1.8% AOL Time Warner, Inc. (b) ...................... 208,350 $ 6,688,035 Viacom, Inc. Class B (b) ....................... 239,729 10,584,035 ------------ 17,272,070 ------------ EQUIPMENT (SEMICONDUCTORS)--3.5% Applied Materials, Inc. (b) .................... 138,000 5,533,800 KLA-Tencor Corp. (b) ........................... 244,200 12,102,552 Novellus Systems, Inc. (b) ..................... 88,200 3,479,490 Teradyne, Inc. (b) ............................. 385,800 11,628,012 ------------ 32,743,854 ------------ FINANCIAL (DIVERSIFIED)--6.9% American Express Co. ........................... 209,400 7,473,486 Citigroup, Inc. ................................ 451,166 22,774,860 Freddie Mac .................................... 344,000 22,497,600 Morgan Stanley Dean Witter & Co. ............... 205,500 11,495,670 ------------ 64,241,616 ------------ HEALTH CARE (DIVERSIFIED)--4.7% Bristol-Myers Squibb Co. ....................... 346,000 17,646,000 Johnson & Johnson .............................. 454,520 26,862,132 ------------ 44,508,132 ------------ HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--8.3% Genentech, Inc. (b) ............................ 137,860 7,478,905 Merck & Co., Inc. .............................. 278,350 16,366,980 Pfizer, Inc. ................................... 1,038,975 41,403,154 Pharmacia Corp. ................................ 301,439 12,856,373 ------------ 78,105,412 ------------ HEALTH CARE (GENERIC AND OTHER)--1.2% King Pharmaceuticals, Inc. (b) ................. 277,000 11,670,010 ------------ HEALTH CARE (MANAGED CARE)--2.8% UnitedHealth Group, Inc. ....................... 135,000 9,553,950 WellPoint Health Networks, Inc. (b) ............ 140,000 16,359,000 ------------ 25,912,950 ------------ HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--2.3% Baxter International, Inc. ..................... 138,000 7,400,940 Medtronic, Inc. (b) ............................ 278,950 14,285,029 ------------ 21,685,969 ------------ INSURANCE (MULTI-LINE)--1.2% American International Group, Inc. ............. 137,000 10,877,800 ------------ INVESTMENT BANKING/BROKERAGE--2.0% Merrill Lynch & Co., Inc. ...................... 273,500 14,254,820 Waddell & Reed Financial, Inc. Class A ......... 138,000 4,443,600 ------------ 18,698,420 ------------ INVESTMENT MANAGEMENT--0.4% Stilwell Financial, Inc. ......................... 139,000 3,783,580 ------------ MANUFACTURING (DIVERSIFIED)--4.5% Tyco International Ltd. ........................ 627,300 36,947,970 United Technologies Corp. ...................... 84,200 5,441,846 ------------ 42,389,816 ------------ OIL & GAS (EXPLORATION & PRODUCTION)--1.2% Anadarko Petroleum Corp. ....................... 139,000 7,902,150 EOG Resources, Inc. ............................ 85,000 3,324,350 ------------ 11,226,500 ------------ See Notes to Financial Statements 42 PHOENIX-ENGEMANN CAPITAL GROWTH SERIES SHARES VALUE --------- ------------ RETAIL (BUILDING SUPPLIES)--3.6% Home Depot, Inc. (The) ......................... 376,450 $ 19,202,715 Lowe's Cos., Inc. .............................. 312,000 14,479,920 ------------ 33,682,635 ------------ RETAIL (DEPARTMENT STORES)--1.0% Kohl's Corp. (b) ............................... 136,400 9,608,016 ------------ RETAIL (DRUG STORES)--0.5% Walgreen Co. ................................... 139,000 4,678,740 ------------ RETAIL (GENERAL MERCHANDISE)--3.0% Wal-Mart Stores, Inc. .......................... 486,700 28,009,585 ------------ SERVICES (COMPUTER SYSTEMS)--0.7% SunGard Data Systems, Inc. (b) ................. 241,000 6,972,130 ------------ SERVICES (DATA PROCESSING)--0.5% First Data Corp. ............................... 56,000 4,393,200 ------------ TELEPHONE--1.2% SBC Communications, Inc. ....................... 291,000 11,398,470 ------------ TOTAL COMMON STOCKS (Identified cost $705,455,018) ........................... 831,942,982 ------------ FOREIGN COMMON STOCKS--6.1% COMMUNICATIONS EQUIPMENT--0.7% Nokia Oyj ADR (Finland) ........................ 274,000 6,721,220 ------------ COMPUTERS (SOFTWARE & SERVICES)--0.8% Check Point Software Technologies Ltd. (Israel)(b) .................................. 175,000 6,980,750 ------------ ELECTRICAL EQUIPMENT--0.7% Flextronics International Ltd. (Singapore) (b) . 274,100 6,575,659 ------------ ELECTRONICS (SEMICONDUCTORS)--1.9% Celestica, Inc. (Canada) (b) ................... 139,000 5,614,210 Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan) (b) ................................. 416,800 7,156,456 United Microelectronics Corp. (Taiwan) (b) ..... 556,900 5,346,240 ------------ 18,116,906 ------------ HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--0.9% Teva Pharmaceutical Industries Ltd. ADR (Israel) 139,000 8,566,570 ------------ SERVICES (COMMERCIAL & CONSUMER)--1.1% Accenture Ltd. Class A (Bermuda) (b) ........... 380,000 10,229,600 ------------ TOTAL FOREIGN COMMON STOCKS (Identified cost $53,593,933) ............................ 57,190,705 ------------ TOTAL LONG-TERM INVESTMENTS--94.8% (Identified cost $759,048,951) ........................... 889,133,687 ------------ STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ SHORT-TERM OBLIGATIONS--4.8% CERTIFICATE OF DEPOSIT--0.2% Canadian Imperial Bank of Commerce 4.23%, 5/22/02 .......................... AA- $1,500 $ 1,513,172 ------------ COMMERCIAL PAPER--3.2% Verizon Network Funding Corp. 2%, 1/2/02 .. A-1+ 4,425 4,424,754 Goldman Sachs Group L.P. 1.75%, 1/3/02 .... A-1+ 5,035 5,034,511 Lexington Parker Capital Co. LLC 2%, 1/8/02 .................................. A-1 3,710 3,708,557 Preferred Receivables Funding Corp. 2.03%, 1/9/02 ........................... A-1 2,104 2,103,051 Park Avenue Receivables Corp. 2.05%, 1/15/02 ................................. A-1 4,534 4,530,386 Receivables Capital Corp. 2.05%, 1/25/02 .. A-1+ 2,500 2,496,583 Heinz (H.J.) Finance Co. 1.97%, 1/28/02 ... A-1 5,000 4,992,500 Corporate Asset Funding Co. 2%, 2/4/02 .... A-1+ 3,000 2,994,758 30,285,100 ------------ FEDERAL AGENCY SECURITIES--1.1% Freddie Mac Discount Note 1.80%, 1/9/02 ... AAA 1,855 1,854,258 Freddie Mac Discount Note 1.72%, 1/29/02 .. AAA 5,721 5,713,347 Federal Home Loan Bank Discount Note 6.25%, 11/15/02 ......................... AAA 2,500 2,586,755 ------------ 10,154,360 ------------ MEDIUM TERM NOTES--0.3% Bank of America Corp. 2%, 3/19/02 (c) ..... A+ 2,500 2,500,602 ------------ TOTAL SHORT-TERM OBLIGATIONS (Identified cost $44,424,387) ............................ 44,453,234 ------------ TOTAL INVESTMENTS--99.6% (Identified cost $803,473,338) ........................... 933,586,921(a) Other assets and liabilities, net--0.4% .................... 3,981,916 ------------ NET ASSETS--100.0% ......................................... $937,568,837 ============ (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $196,065,228 and gross depreciation of $66,181,731 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $803,703,424. (b) Non-income producing. (c) Variable or step coupon security; interest rate shown reflects the rate currently in effect. See Notes to Financial Statements 43 PHOENIX-ENGEMANN CAPITAL GROWTH SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001
ASSETS Investment securities at value (Identified cost $803,473,338) .................................... $ 933,586,921 Receivables Investment securities sold ........................................ 4,760,600 Fund shares sold .................................................. 534,814 Dividends and interest ............................................ 397,743 Prepaid expenses .................................................... 10,611 -------------- Total assets .................................................... 939,290,689 -------------- LIABILITIES Cash overdraft ...................................................... 12,122 Payables Fund shares repurchased ........................................... 829,670 Investment advisory fee ........................................... 515,909 Printing fee ...................................................... 243,423 Financial agent fee ............................................... 33,725 Trustees' fee ..................................................... 3,262 Accrued expenses .................................................... 83,741 -------------- Total liabilities ............................................... 1,721,852 -------------- NET ASSETS .......................................................... $ 937,568,837 ============== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest .................. $1,089,224,580 Accumulated net realized loss ..................................... (281,769,326) Net unrealized appreciation ....................................... 130,113,583 -------------- NET ASSETS .......................................................... $ 937,568,837 ============== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ............................. 65,062,185 ============== Net asset value and offering price per share ........................ $14.41 ======
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends ......................................................... $ 6,023,637 Interest .......................................................... 2,603,021 Foreign taxes withheld ............................................ (113,376) ------------- Total investment income ......................................... 8,513,282 ------------- EXPENSES Investment advisory fee ........................................... 7,387,818 Financial agent fee ............................................... 435,899 Printing .......................................................... 291,761 Custodian ......................................................... 194,890 Professional ...................................................... 26,729 Trustees .......................................................... 8,437 Miscellaneous ..................................................... 37,206 ------------- Total expenses .................................................. 8,382,740 Custodian fees paid indirectly .................................. (1,330) ------------- Net expenses .................................................... 8,381,410 ------------- NET INVESTMENT INCOME ............................................... 131,872 ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ................................... (231,402,697) Net change in unrealized appreciation (depreciation) on investments (332,528,295) ------------- NET LOSS ON INVESTMENTS ............................................. (563,930,992) ------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ................ $(563,799,120) -------------
See Notes to Financial Statements 44 PHOENIX-ENGEMANN CAPITAL GROWTH SERIES STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED 12/31/01 12/31/00 -------------- -------------- FROM OPERATIONS Net investment income (loss) ...................................... $ 131,872 $ 703,978 Net realized gain (loss) .......................................... (231,402,697) (9,398,655) Net change in unrealized appreciation (depreciation) .............. (332,528,295) (358,538,671) -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ....... (563,799,120) (367,233,348) -------------- -------------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ............................................. (716,525) (150,501) Net realized short-term gains ..................................... -- (31,076,845) Net realized long-term gains ...................................... (24,334,683) (56,728,679) -------------- -------------- DECREASE IN NET ASSETS FROM DISTRIBUTION TO SHAREHOLDERS .......... (25,051,208) (87,956,025) -------------- -------------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (7,384,942 and 7,850,882 shares, respectively) ................................................... 123,103,730 216,280,791 Net asset value of shares issued from reinvestment of distributions (1,481,978 and 3,317,027 shares, respectively) .................. 25,051,208 87,956,025 Cost of shares repurchased (18,495,629 and 15,890,334 shares, respectively) ................................ (301,771,867) (438,101,258) -------------- -------------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ....... (153,616,929) (133,864,442) -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS ............................. (742,467,257) (589,053,815) NET ASSETS Beginning of period ............................................... 1,680,036,094 2,269,089,909 -------------- -------------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $0 AND $553,477, RESPECTIVELY) ........................ $ 937,568,837 $1,680,036,094 ============== ==============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
YEAR ENDED DECEMBER 31, --------------------------------------------------------------------------------- 2001(2) 2000 1999 1998 1997 ------ ------ ------ ------ ------ Net asset value, beginning of period .... $22.49 $28.57 $23.93 $19.16 $18.89 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .......... --(1) --(1) 0.03 0.03 0.13 Net realized and unrealized gain (loss) (7.72) (4.91) 6.97 5.65 3.70 ------ ------ ------ ------ ------ Total from investment operations .... (7.72) (4.91) 7.00 5.68 3.83 ------ ------ ------ ------ ------ ESS DISTRIBUTIONS Dividends from net investment income .. (0.01) --(1) (0.06) (0.03) (0.13) Dividends from net realized gains ..... (0.35) (1.17) (2.31) (0.88) (3.43) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS ................. (0.36) (1.17) (2.37) (0.91) (3.56) ------ ------ ------ ------ ------ Capital contribution from Adviser ..... -- -- 0.01 -- -- ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE (8.08) (6.08) 4.64 4.77 0.27 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD .......... $14.41 $22.49 $28.57 $23.93 $19.16 ====== ====== ====== ====== ====== Total return ............................ (34.57)% (17.77)% 29.67% 30.01% 21.07% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) . $937,569 $1,680,036 $2,269,090 $1,876,296 $1,505,568 RATIO TO AVERAGE NET ASSETS OF: Operating expenses .................... 0.72%(3) 0.68% 0.68% 0.69% 0.74% Net investment income ................. 0.01% 0.03% 0.11% 0.15% 0.64% Portfolio turnover rate ............... 58% 82% 106% 102% 284% (1) Amount is less than $0.01. (2) As required, effective January 1, 2001, the Fund has adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. There was no effect to net investment income per share and net realized and unrealized gain (loss) per share and the ratio of net investment income to average net assets. Per share ratios and supplemental data from prior periods have not been restated to reflect this change. (3) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 45 PHOENIX-ENGEMANN NIFTY FIFTY SERIES INVESTOR PROFILE The Fund seeks long-term growth of capital. INVESTMENT ADVISER'S REPORT Unquestionably, 2001 was one of the most challenging years for equity investors in at least a generation. While the broader S&P 500 Index(2) posted its second consecutive decline of 11.87%, growth stock investors fared even worse, as represented by the Russell 1000 Growth Index(1), which was down more than 20%.(1) The economy officially entered into a recession during the spring, and by summer corporate profits swooned. S&P 500 operating profits were down an unprecedented 32-34% for both the second and third quarters. Today, many growth stocks are economically sensitive, especially technology, media and retail companies. Our portfolio's emphasis on these sectors hurt our performance for the first nine months of 2001 but helped dramatically in the fourth quarter. We continue to believe that these areas represent great opportunities for long-term growth. For the 12 months ended December 31, 2001, the portfolio returned - -35.30%. Because the market descent in 2001 was very broad, nearly all industry groups experienced declines. Information technology, the largest group in the portfolio, experienced the greatest loss, and was the source of our poorest relative showing. However, this group also represented our best performing sector in the market's rally during the fourth quarter. On the flip side, positive performance in 2001 was turned in by many of our retail holdings. OUTLOOK Looking ahead, we believe we will see an economic recovery in the second half of 2002. It is our feeling that there is already a lot of fuel in place to ignite a solid rebound. In 2001, we had 11 interest rate cuts by the Federal Reserve, which brought real rates (after inflation) to zero or less. Lower interest rates have already resulted in a major mortgage-refinancing boom that has put an estimated $85 billion into consumers' pockets. And, lastly, both before and after September 11th, the Federal government has taken several steps to stimulate the economy. The portfolio today is well represented in those areas that are poised to see the sharpest recovery. We have an overweighted position in technology, specifically semiconductors. Semiconductors can now be found in many diverse segments of the economy, and the sector should be a leading beneficiary of a rebound, in our view. We also have significant positions in media companies. We expect a recovery in overall advertising spending later this year, and our portfolio holds many of what we believe are the leading media properties that should be among the first to see increased spending by advertisers. 46 PHOENIX-ENGEMANN NIFTY FIFTY SERIES [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Russell 1000 Nifty Fifty Series Growth Stock Index(1) S&P 500 Index(2) 3/2/98 $10,000.00 $10,000.00 $10,000.00 12/31/98 12,625.90 12,595.50 11,895.30 12/31/99 16,685.20 16,772.00 14,409.40 12/29/00 13,663.70 13,011.10 13,085.60 12/31/01 8,839.98 10,353.80 11,531.70 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 3/2/98 TO 1 YEAR 12/31/01 - ---------------------------------------------------------------------------- Nifty Fifty Series (35.30)% (3.16)% - ---------------------------------------------------------------------------- Russell 1000 Growth Stock Index(1) (20.42)% 0.91% - ---------------------------------------------------------------------------- S&P 500 Index(2) (11.87)% 3.79% - ---------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 3/2/98 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. (1) The Russell 1000 Growth Stock Index is an unmanaged measure of large-cap growth-oriented stock total return performance. (2) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 47 PHOENIX-ENGEMANN NIFTY FIFTY SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE --------- ----------- COMMON STOCKS--87.9% BROADCASTING (TELEVISION, RADIO & CABLE)--2.1% Univision Communications, Inc. Class A (b) ......... 23,450 $ 948,787 ----------- COMMUNICATIONS EQUIPMENT--0.5% CIENA Corp. (b) .................................... 15,200 217,512 ----------- COMPUTERS (HARDWARE)--2.5% Brocade Communications Systems, Inc. (b) ........... 10,700 354,384 Sun Microsystems, Inc. (b) ......................... 64,400 792,120 ----------- 1,146,504 ----------- COMPUTERS (NETWORKING)--4.4% Cisco Systems, Inc. (b) ............................ 106,670 1,931,794 McDATA Corp. Class A (b) ........................... 3,464 84,868 ----------- 2,016,662 ----------- COMPUTERS (PERIPHERALS)--2.0% EMC Corp. (b) ...................................... 68,380 919,027 ----------- COMPUTERS (SOFTWARE & SERVICES)--8.9% BEA Systems, Inc. (b) .............................. 40,980 631,092 i2 Technologies, Inc. (b) .......................... 34,900 275,710 Oracle Corp. (b) ................................... 90,870 1,254,915 Siebel Systems, Inc. (b) ........................... 10,350 289,593 VeriSign, Inc. (b) ................................. 16,700 635,268 VERITAS Software Corp. (b) ......................... 22,970 1,029,745 ----------- .................................................... 4,116,323 ----------- ELECTRICAL EQUIPMENT--2.2% General Electric Co. ............................... 25,600 1,026,048 ----------- ELECTRONICS (SEMICONDUCTORS)--9.5% Analog Devices, Inc. (b) ........................... 15,600 692,484 Intel Corp. ........................................ 30 943 Maxim Integrated Products, Inc. (b) ................ 17,070 896,346 Texas Instruments, Inc. ............................ 56,370 1,578,360 Xilinx, Inc. (b) ................................... 31,370 1,224,999 ----------- 4,393,132 ----------- ENTERTAINMENT--7.2% AOL Time Warner, Inc. (b) .......................... 47,440 1,522,824 Viacom, Inc. Class B (b) ........................... 40,750 1,799,112 ----------- 3,321,936 ----------- EQUIPMENT (SEMICONDUCTORS)--1.9% Applied Materials, Inc. (b) ........................ 21,600 866,160 ----------- FINANCIAL (DIVERSIFIED)--10.2% American Express Co. ............................... 44,710 1,595,700 Citigroup, Inc. .................................... 42,766 2,158,828 Freddie Mac ........................................ 14,500 948,300 ----------- 4,702,828 ----------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--11.9% Genentech, Inc. (b) ................................ 12,030 652,627 Lilly (Eli) & Co. .................................. 5,500 431,970 Merck & Co., Inc. .................................. 19,590 1,151,892 Pfizer, Inc. ....................................... 56,832 2,264,755 Pharmacia Corp. .................................... 23,130 986,495 ----------- 5,487,739 ----------- SHARES VALUE --------- ----------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--5.6% Medtronic, Inc. (b) ................................ 49,970 $ 2,558,964 INVESTMENT MANAGEMENT--1.2% Stilwell Financial, Inc. ........................... 20,620 561,276 ----------- MANUFACTURING (DIVERSIFIED)--4.8% Tyco International Ltd. ............................ 37,454 2,206,041 ----------- OIL & GAS (EXPLORATION & PRODUCTION)--3.4% Anadarko Petroleum Corp. ........................... 14,100 801,585 Burlington Resources, Inc. ......................... 20,000 750,800 ----------- 1,552,385 ----------- RETAIL (BUILDING SUPPLIES)--3.4% Home Depot, Inc. (The) ............................. 20,910 1,066,619 Lowe's Cos., Inc. .................................. 10,800 501,228 ----------- 1,567,847 ----------- RETAIL (DRUG STORES)--1.1% Walgreen Co. ....................................... 14,700 494,802 ----------- RETAIL (GENERAL MERCHANDISE)--5.1% Costco Wholesale Corp. (b) ......................... 27,900 1,238,202 Wal-Mart Stores, Inc. .............................. 19,550 1,125,102 ----------- 2,363,304 ----------- TOTAL COMMON STOCKS (Identified cost $48,435,683) ............................... 40,467,277 ----------- FOREIGN COMMON STOCKS--3.8% COMMUNICATIONS EQUIPMENT--1.8% Nokia Oyj ADR (Finland) ............................ 33,700 826,661 ----------- COMPUTERS (SOFTWARE & SERVICES)--0.9% Check Point Software Technologies Ltd. (Israel) (b) .. 10,900 434,801 ----------- ELECTRICAL EQUIPMENT--1.1% Flextronics International Ltd. (Singapore) (b) ..... 21,150 507,389 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $2,182,022) ................................ 1,768,851 ----------- TOTAL LONG-TERM INVESTMENTS--91.7% (Identified cost $50,617,705) ............................... 42,236,128 ----------- STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) ----------- ----- SHORT-TERM OBLIGATIONS--7.9% COMMERCIAL PAPER--7.9% Govco, Inc. 1.75%, 1/2/02 ............... A-1+ $ 725 724,965 Verizon Network Funding Corp. 2%, 1/2/02 A-1+ 1,060 1,059,941 Goldman Sachs Group, Inc. 1.75%, 1/4/02 . A-1+ 1,850 1,849,730 ----------- 3,634,636 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $3,634,636) ................................ 3,634,636 ----------- TOTAL INVESTMENTS--99.6% (Identified cost $54,252,341) ............................... 45,870,764(a) Other assets and liabilities, net--0.4% ..................... 191,903 ----------- NET ASSETS--100.0% ............................................ $46,062,667 =========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $3,904,241 and gross depreciation of $12,441,205 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $54,407,728. (b) Non-income producing. See Notes to Financial Statements 48 PHOENIX-ENGEMANN NIFTY FIFTY SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001
ASSETS Investment securities at value (Identified cost $54,252,341) ................... $ 45,870,764 Cash ........................................................................... 3,230 Receivables Investment securities sold ................................................... 245,432 Fund shares sold ............................................................. 58,259 Dividends .................................................................... 16,051 Prepaid expenses ............................................................... 486 ------------ Total assets ............................................................... 46,194,222 ------------ LIABILITIES Payables Fund shares repurchased ...................................................... 21,763 Printing fee ................................................................. 41,858 Investment advisory fee ...................................................... 31,098 Professional fee ............................................................. 24,536 Financial agent fee .......................................................... 6,043 Trustees' fee ................................................................ 3,262 Accrued expenses ............................................................... 2,995 ------------ Total liabilities .......................................................... 131,555 ------------ NET ASSETS ..................................................................... $ 46,062,667 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ............................. $ 74,168,166 Accumulated net realized loss ................................................ (19,723,922) Net unrealized depreciation .................................................. (8,381,577) ------------ NET ASSETS ..................................................................... $ 46,062,667 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ........................................ 5,212,657 ============ Net asset value and offering price per share ................................... $8.84 ===== STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends .................................................................... $ 194,573 Interest ..................................................................... 134,278 Foreign taxes withheld ....................................................... (88) ------------ Total investment income .................................................... 328,763 ------------ EXPENSES Investment advisory fee ...................................................... 485,605 Financial agent fee .......................................................... 79,832 Printing ..................................................................... 45,827 Professional ................................................................. 26,809 Custodian .................................................................... 14,640 Trustees ..................................................................... 8,437 Miscellaneous ................................................................ 8,086 ------------ Total expenses ............................................................. 669,236 Less expenses borne by investment adviser .................................. (102,442) Custodian fees paid indirectly ............................................. (266) ------------ Net expenses ............................................................... 566,528 ------------ NET INVESTMENT LOSS ............................................................ (237,765) ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .............................................. (13,506,682) Net change in unrealized appreciation (depreciation) on investments .......... (12,898,912) ------------ NET LOSS ON INVESTMENTS ........................................................ (26,405,594) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................... $(26,643,359) ============
See Notes to Financial Statements 49 PHOENIX-ENGEMANN NIFTY FIFTY SERIES STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ------------ ------------ FROM OPERATIONS Net investment income (loss) .................................................... $ (237,765) $ (275,936) Net realized gain (loss) ........................................................ (13,506,682) (5,141,828) Net change in unrealized appreciation (depreciation) ............................ (12,898,912) (10,800,484) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................... (26,643,359) (16,218,248) ------------ ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (1,358,894 and 2,731,022 shares, respectively) .... 13,961,373 45,240,716 Cost of shares repurchased (1,548,946 and 1,256,726 shares, respectively) ....... (15,047,193) (20,750,923) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ....................... (1,085,820) 24,489,793 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ........................................... (27,729,179) 8,271,545 NET ASSETS Beginning of period ............................................................... 73,791,846 65,520,301 ------------ ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $0 AND $0, RESPECTIVELY) ................................................................. $ 46,062,667 $ 73,791,846 ============ ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
YEAR ENDED FROM DECEMBER 31, INCEPTION ----------------------------------------------- 3/2/98 TO 2001 2000 1999 12/31/98 ------ ------ ------ -------- Net asset value, beginning of period .... $13.66 $16.68 $12.62 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .......... (0.04)(4) (0.06)(4) -- 0.01(4) Net realized and unrealized gain (loss) (4.78) (2.96) 4.06 2.62 ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .... (4.82) (3.02) 4.06 2.63 ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .. -- -- -- (0.01) ------ ------ ------ ------ TOTAL DISTRIBUTIONS ................. -- -- -- (0.01) ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ............... (4.82) (3.02) 4.06 2.62 ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD .......... $ 8.84 $13.66 $16.68 $12.62 ====== ====== ====== ====== Total return ............................ (35.30)% (18.11)% 32.15% 26.26%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ... $46,063 $73,792 $65,520 $13,153 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(3) ................. 1.05%(5) 1.05% 1.05% 1.05%(1) Net investment income (loss) .......... (0.44)% (0.34)% (0.12)% 0.07%(1) Portfolio turnover rate ................. 57% 86% 40% 90%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.24%, 1.19%, 1.43% and 2.58% for the periods ended December 31, 2001, 2000, 1999 and 1998, respectively. (4) Computed using average shares outstanding. (5) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 50 PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking long-term growth of capital. Investors should note that the Fund may invest in small-company stocks, which involves added risks, such as greater price volatility, less liquidity and increased competitive threat. INVESTMENT ADVISER'S REPORT We entered 2001 with the expectation that U.S. economic growth would slow somewhat, but remained positive that the Federal Reserve could successfully navigate a soft landing. What actually occurred, as we now know, was a full-fledged recession in which corporate profits plummeted. Earnings estimates for most companies were much too high to start the year and were lowered throughout the year. Stock prices followed declining earnings. By the end of 2001, most of the major stock indices were down, including the Russell 2000 Growth Stock Index(1), which is an index of small-capitalization growth companies. Phoenix-Engemann Small & Mid-Cap Growth Series unfortunately participated in the market decline. The Fund was down 26.72% for the full year. This compares to the Russell 2000 Growth Stock Index, which declined 9.23%. Given our mild economic outlook at the beginning of the year, we held more economically sensitive stocks then we otherwise would have, which hurt the yearly performance. Many of the technology names that helped us over the previous few years gave back much of their gains in 2001. BEA Systems and Applied Micro Circuits were two of the larger technology companies in the portfolio that hurt our performance for this year. Although we are very excited about the long-term prospects of these two companies, the poor economic environment was paramount in the stock price performance. In addition, several of our biotech holdings experienced product approval delays as the FDA implemented stricter standards for approval, including Aviron whose lead product Flumist is an intranasal flu vaccine, and Inhale Therapeutics, which is in the final phase of clinical testing for an inhaled form of insulin. We continue to believe that these products will ultimately be approved and reach the market. The uncertainty surrounding the delays, however, had a negative impact on the share prices of these companies. Although corporate buyers scaled back their capital spending in 2001, the American consumer remained active. As such, several of our retail holdings performed well, including Whole Food Markets and Cheesecake Factory. OUTLOOK Looking ahead, we believe we will see an economic recovery in the second half of 2002. It is our feeling that there is already a lot of fuel in place to ignite a solid rebound. While 2001 had an almost unprecedented number of problems, it also had an almost unprecedented number of stimuli to enhance the economy. We had 11 interest rate cuts from the Federal Reserve that brought real rates--after inflation--to zero or less. The Fed pumped extra money into the economy even faster than it did in late 1999 during the Y2K financial liquidity scare. We also had tax rebates last year and tax cuts that will take effect this year that could bolster consumer spending. We had a record number of home refinancings, which put as much as $85 billion into the pockets of consumers, according to some estimates. And finally, we enjoyed far lower energy costs. The stock market typically anticipates economic events by nine to 12 months. It did so in 2000, anticipating early in the year the downturn that took place in the fourth quarter and especially in 2001. We believe we are seeing the other side of that equation today. We expect that the market has begun to discount a recovery and therefore will continue its upward trend for several months. The road may be quite bumpy near term as investors balance current weakness with a rosier long-term outlook. We believe we've seen the worst of the declines and that it won't be long before the market begins to focus on the future again instead of the current recession. The one thing we know for sure about recessions is that they always end. Phoenix Engemann Small & Mid-Cap Growth Series is positioned for an economic recovery. Many of the companies in the portfolio currently have cyclically depressed earnings, which would reverse and grow in a recovery. As such, we expect the portfolio to perform well in such an environment. 51 PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH SERIES [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Small & Mid-Cap Russell 2000 Growth Series Growth Stock Index(1) S&P 500 Index(2) 8/15/00 $10,000.00 $10,000.00 $10,000.00 12/29/00 8,482.21 8,299.45 8,930.35 12/31/01 6,216.06 7,533.56 7,869.88 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 8/15/00 TO 1 YEAR 12/31/01 - ------------------------------------------------------------------------------ Small & Mid-Cap Growth Series (26.72)% (29.18)% - ------------------------------------------------------------------------------ Russell 2000 Growth Stock Index(1) (9.23)% (18.58)% - ------------------------------------------------------------------------------ S&P 500 Index(2) (11.87)% (15.96)% - ------------------------------------------------------------------------------ This chart assumes an initial gross investment of $10,000 made on 8/15/00 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. 1 The Russell 2000 Growth Stock Index is unmanaged and measures small-cap growth-oriented stock total-return performance. 2 The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 52 PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE --------- ----------- COMMON STOCKS--91.9% AEROSPACE/DEFENSE--0.9% Alliant Techsystems, Inc. (b) ...................... 900 $ 69,480 United Defense Industries, Inc. (b) ................ 2,510 52,836 ----------- 122,316 ----------- AIR FREIGHT--1.0% Expeditors International of Washington, Inc. ....... 2,285 130,131 ----------- BANKS (REGIONAL)--0.7% Investors Financial Services Corp. ................. 1,375 91,039 ----------- BIOTECHNOLOGY--7.7% Aviron (b) ......................................... 5,965 296,639 COR Therapeutics, Inc. (b) ......................... 2,120 50,732 CV Therapeutics, Inc. (b) .......................... 400 20,808 Enzon, Inc. (b) .................................... 5 281 IDEC Pharmaceuticals Corp. (b) ..................... 6,185 426,332 InterMune, Inc. (b) ................................ 550 27,093 Myriad Genetics, Inc. (b) .......................... 1,145 60,273 NPS Pharmaceuticals, Inc. (b) ...................... 3,445 131,944 Vertex Pharmaceuticals, Inc. (b) ................... 885 21,762 ----------- 1,035,864 ----------- BUILDING MATERIALS--1.0% Dal-Tile International, Inc. (b) ................... 5,940 138,105 ----------- COMPUTERS (NETWORKING)--0.4% McDATA Corp. Class B (b) ........................... 2,140 53,735 ----------- COMPUTERS (PERIPHERALS)--3.9% Finisar Corp. (b) .................................. 4,600 46,782 NY-FIX, Inc. (b) ................................... 22,970 459,859 Procom Technology, Inc. (b) ........................ 5,200 16,640 ----------- 523,281 ----------- COMPUTERS (SOFTWARE & SERVICES)--7.6% BEA Systems, Inc. (b) .............................. 14,060 216,524 i2 Technologies, Inc. (b) .......................... 17,100 135,090 Interwoven, Inc. (b) ............................... 11,690 113,860 Nassda Corp. (b) ................................... 1,420 31,936 NetIQ Corp. (b) .................................... 4,910 173,127 OPNET Technologies, Inc. (b) ....................... 6,180 89,054 Peregrine Systems, Inc. (b) ........................ 17,560 260,415 ----------- 1,020,006 ----------- ELECTRIC COMPANIES--1.2% Aquila, Inc. (b) ................................... 2,700 46,170 NewPower Holdings, Inc. (b) ........................ 15,675 11,599 UtiliCorp United, Inc. ............................. 4,275 107,602 ----------- 165,371 ELECTRICAL EQUIPMENT--0.9% Black Box Corp. (b) ................................ 700 37,016 Pemstar, Inc. (b) .................................. 3,355 40,260 Plexus Corp. (b) ................................... 1,600 42,496 ----------- 119,772 ----------- ELECTRONICS (SEMICONDUCTORS)--6.5% Applied Micro Circuits Corp. (b) ................... 15,680 177,497 Elantec Semiconductor, Inc. (b) .................... 2,545 97,728 Integrated Circuit Systems, Inc. (b) ............... 3,900 88,101 Micrel, Inc. (b) ................................... 9,455 248,005 MIPS Technologies, Inc. Class A (b) ................ 6,115 52,834 QuickLogic Corp. (b) ............................... 9,650 48,250 SHARES VALUE --------- ----------- ELECTRONICS (SEMICONDUCTORS)--CONTINUED Silicon Storage Technology, Inc. (b) ............... 7,140 $ 68,830 TriQuint Semiconductor, Inc. (b) ................... 7,100 87,046 ----------- 868,291 ----------- ENGINEERING & CONSTRUCTION--0.3% SBA Communications Corp. (b) ....................... 3,410 44,398 ----------- EQUIPMENT (SEMICONDUCTORS)--5.0% Axcelis Technologies, Inc. (b) ..................... 11,400 146,946 Cymer, Inc. (b) .................................... 7,080 189,248 Photronics, Inc. (b) ............................... 2,000 62,700 Rudolph Technologies, Inc. (b) ..................... 7,925 271,986 ----------- 670,880 ----------- FINANCIAL (DIVERSIFIED)--2.9% Federal Agricultural Mortgage Corp. Class C (b) .... 9,735 394,268 ----------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--4.3% ImmunoGen, Inc. (b) ................................ 5,100 84,558 Inhale Therapeutic Systems, Inc. (b) ............... 12,670 235,028 Ista Pharmaceuticals, Inc. (b) ..................... 2,085 14,011 Medicines Co. (The) (b) ............................ 7,410 85,882 PRAECIS Pharmaceuticals, Inc. (b) .................. 7,110 41,380 Tanox, Inc. (b) .................................... 6,200 114,716 ----------- 575,575 ----------- HEALTH CARE (GENERIC AND OTHER)--0.1% American Pharmaceutical Partners, Inc. (b) ......... 750 15,600 ----------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--2.0% AeroGen, Inc. (b) .................................. 4,520 15,820 Affymetrix, Inc. (b) ............................... 4,130 155,907 ArthroCare Corp. (b) ............................... 2,115 37,922 Edwards Lifesciences Corp. (b) ..................... 1,400 38,682 STAAR Surgical Co. (b) ............................. 5,850 22,523 ----------- 270,854 ----------- HEALTH CARE (SPECIALIZED SERVICES)--3.3% Apria Healthcare Group, Inc. (b) ................... 2,250 56,227 Arena Pharmaceuticals, Inc. (b) .................... 2,655 31,940 CuraGen Corp. (b) .................................. 2,905 64,985 Omnicare, Inc. ..................................... 9,125 227,030 Unilab Corp. (b) ................................... 2,450 61,495 ----------- 441,677 ----------- INVESTMENT MANAGEMENT--6.8% Gabelli Asset Management, Inc. Class A (b) ......... 9,375 405,000 Stewart (W.P.) & Co. Ltd ........................... 6,930 181,566 Stilwell Financial, Inc. ........................... 12,170 331,267 ----------- 917,833 ----------- LEISURE TIME (PRODUCTS)--0.3% Meade Instruments Corp. (b) ........................ 9,690 34,690 ----------- MACHINERY (DIVERSIFIED)--0.2% Mykrolis Corp. (b) ................................. 2,000 32,000 ----------- OIL & GAS (DRILLING & EQUIPMENT)--0.6% Grey Wolf, Inc. (b) ................................ 29,370 87,229 ----------- OIL & GAS (EXPLORATION & PRODUCTION)--3.6% ATP Oil & Gas Corp. (b) ............................ 14,150 42,167 Chesapeake Energy Corp. (b) ........................ 2,800 18,508 Energy Exploration Technologies, Inc. (b) .......... 6,225 6,287 Evergreen Resources, Inc. (b) ...................... 3,700 142,857 See Notes to Financial Statements 53 PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH SERIES SHARES VALUE --------- ----------- OIL & GAS (EXPLORATION & PRODUCTION)--CONTINUED Forest Oil Corp. (b) ............................... 3,485 $ 98,312 Houston Exploration Co. (The) (b) .................. 5,090 170,922 ----------- 479,053 ----------- RESTAURANTS--5.1% AFC Enterprises, Inc. (b) .......................... 2,520 71,543 Buca, Inc. (b) ..................................... 9,300 150,753 California Pizza Kitchen, Inc. (b) ................. 4,630 114,592 Cheesecake Factory, Inc. (The) (b) ................. 10,087 350,725 ----------- 687,613 ----------- RETAIL (BUILDING SUPPLIES)--1.0% Fastenal Co. ....................................... 2,010 133,524 ----------- RETAIL (COMPUTERS & ELECTRONICS)--0.6% Good Guys, Inc. (b) ................................ 21,290 84,734 ----------- RETAIL (DISCOUNTERS)--1.1% Factory 2-U Stores, Inc. (b) ....................... 7,300 146,292 ----------- RETAIL (DRUG STORES)--0.7% Duane Reade, Inc. (b) .............................. 3,310 100,459 ----------- RETAIL (FOOD CHAINS)--4.6% Smart & Final, Inc. (b) ............................ 9,760 101,894 Whole Foods Market, Inc. (b) ....................... 11,760 512,266 ----------- 614,160 ----------- RETAIL (SPECIALTY)--2.8% Cost Plus, Inc. (b) ................................ 14,200 376,300 ----------- RETAIL (SPECIALTY-APPAREL)--3.9% AnnTaylor Stores Corp. (b) ......................... 4,700 164,500 Charlotte Russe Holding, Inc. (b) .................. 6,400 119,104 Children's Place Retail Stores, Inc. (The) (b) ..... 9,015 244,757 ----------- 528,361 ----------- SERVICES (ADVERTISING/MARKETING)--5.0% Advisory Board Co. (The) (b) ....................... 1,670 46,259 Metris Cos., Inc. .................................. 24,160 621,154 ----------- 667,413 ----------- SERVICES (COMMERCIAL & CONSUMER)--5.3% APAC Customer Services, Inc. (b) ................... 1,600 4,160 Corporate Executive Board Co. (The) (b) ............ 9,510 349,017 Edison Schools, Inc. (b) ........................... 6,055 118,981 Exult, Inc. (b) .................................... 5,060 81,213 NCO Group, Inc. (b) ................................ 3,410 78,089 SITEL Corp. (b) .................................... 1,200 2,880 Weight Watchers International, Inc. (b) ............ 2,490 84,212 ----------- 718,552 ----------- SERVICES (FACILITIES & ENVIRONMENTAL)--0.6% Tetra Tech, Inc. (b) ............................... 4,263 84,866 ----------- TOTAL COMMON STOCKS (Identified cost $13,639,968) ............................... 12,374,242 ----------- SHARES VALUE --------- ----------- FOREIGN COMMON STOCKS--4.0% COMMUNICATIONS EQUIPMENT--0.6% Research In Motion Ltd. (Canada) (b) ............... 3,110 $ 73,769 ----------- COMPUTERS (SOFTWARE & SERVICES)--2.0% Precise Software Solutions Ltd. (Israel) (b) ....... 9,995 206,497 Verisity Ltd. (Israel) (b) ......................... 3,600 68,220 ----------- 274,717 ----------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--0.4% Taro Pharmaceutical Industries Ltd. (Israel) (b) ... 1,200 47,940 ----------- INSURANCE (LIFE/HEALTH)--0.6% London Pacific Group Ltd. ADR (United Kingdom) ..... 21,950 86,922 ----------- OIL & GAS (DRILLING & EQUIPMENT)--0.4% Precision Drilling Corp. (Canada) (b) .............. 2,315 59,773 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $680,980) .................................. 543,121 ----------- TOTAL LONG-TERM INVESTMENTS--95.9% (Identified cost $14,320,948) ............................... 12,917,363 ----------- STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) ----------- ----- SHORT-TERM OBLIGATIONS--5.6% COMMERCIAL PAPER--3.5% Govco, Inc. 1.75%, 1/2/02 ........ A-1+ $475 474,977 FEDERAL AGENCY SECURITIES--2.1% Fannnie Mae 1.90%, 1/10/02 ....... AAA 280 279,867 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $754,844) .................................. 754,844 ----------- TOTAL INVESTMENTS--101.5% (Identified cost $15,075,792) ............................... 13,672,207(a) Other assets and liabilities, net--(1.5)% ................... (207,674) NET ASSETS--100.0% ............................................ $13,464,533 =========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $1,604,509 and gross depreciation of $3,114,665 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $15,182,363. (b) Non-income producing. See Notes to Financial Statements 54 PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $15,075,792) ................... $13,672,207 Cash ........................................................................... 1,359 Receivables Fund shares sold ............................................................. 32,323 Investments securities sold .................................................. 23,348 Receivable from adviser ...................................................... 802 Dividends .................................................................... 31 Prepaid expenses ............................................................... 100 ----------- Total assets ............................................................... 13,730,170 ----------- LIABILITIES Payables Fund shares repurchased ...................................................... 182,205 Investment securities purchased .............................................. 35,036 Professional fee ............................................................. 25,059 Financial agent fee .......................................................... 3,782 Trustees' fee ................................................................ 3,262 Accrued expenses ............................................................... 16,293 ----------- Total liabilities .......................................................... 265,637 ----------- NET ASSETS ..................................................................... $13,464,533 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ............................. $17,438,611 Accumulated net realized loss ................................................ (2,570,493) Net unrealized depreciation .................................................. (1,403,585) ----------- NET ASSETS ..................................................................... $13,464,533 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ..................................................... 2,167,002 =========== Net asset value and offering price per share ................................... $6.21 ===== STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Interest ..................................................................... $ 46,510 Dividends .................................................................... 15,133 ----------- Total investment income .................................................... 61,643 ----------- EXPENSES Investment advisory fee ...................................................... 93,039 Financial agent fee .......................................................... 44,647 Professional ................................................................. 24,887 Custodian .................................................................... 24,767 Printing ..................................................................... 17,472 Trustees ..................................................................... 8,438 Miscellaneous ................................................................ 7,007 ----------- Total expenses ............................................................. 220,257 Less expenses borne by investment adviser .................................. (101,103) Custodian fees paid indirectly ............................................. (284) ----------- Net expenses ............................................................... 118,870 ----------- NET INVESTMENT LOSS ............................................................ (57,227) ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .............................................. (2,105,477) Net change in unrealized appreciation (depreciation) on investments ............................................................. (577,313) ----------- NET LOSS ON INVESTMENTS ........................................................ (2,682,790) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................... $(2,740,017) ===========
See Notes to Financial Statements 55 PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH SERIES STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION YEAR ENDED 8/15/00 TO 12/31/01 12/31/00 ----------- -------------- FROM OPERATIONS Net investment income (loss) ................................................. $ (57,227) $ 4,891 Net realized gain (loss) ..................................................... (2,105,477) (465,016) Net change in unrealized appreciation (depreciation) ......................... (577,313) (826,272) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................. (2,740,017) (1,286,397) ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ........................................................ (5,041) -- ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS .................... (5,041) -- ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (2,084,130 and 898,971 shares, respectively) .............................................. 13,577,158 8,920,684 Net asset value of shares issued from reinvestment of distributions (708 and 0 shares, respectively) ............................. 5,041 -- Cost of shares repurchased (774,877 and 41,930 shares, respectively) ......... (4,642,204) (364,691) ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................ 8,939,995 8,555,993 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS ............................................ 6,194,937 7,269,596 NET ASSETS Beginning of period .......................................................... 7,269,596 -- ----------- ----------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $0 AND $4,891, RESPECTIVELY) .............................. $13,464,533 $ 7,269,596 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
FROM INCEPTION YEAR ENDED 8/15/00 TO 12/31/01 12/31/00 ----------- -------------- Net asset value, beginning of period ........................................... $ 8.48 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ................................................. (0.04)(6) 0.01 Net realized and unrealized gain (loss) ...................................... (2.23) (1.53) ------ ------ TOTAL FROM INVESTMENT OPERATIONS ........................................... (2.27) (1.52) ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ......................................... --(4) -- ------ ------ TOTAL DISTRIBUTIONS ........................................................ -- -- ------ ------ CHANGE IN NET ASSET VALUE ...................................................... (2.27) (1.52) ------ ------ NET ASSET VALUE, END OF PERIOD ................................................. $ 6.21 $ 8.48 ====== ====== Total return ................................................................... (26.72)% (15.18)%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) .......................................... $13,465 $7,270 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ....................................................... 1.15%(5) 1.15%(1) Net investment income (loss) ................................................. (0.55)% 0.21%(1) Portfolio turnover rate ........................................................ 31% 21%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 2.13% and 3.93% for the periods ended December 31, 2001 and 2000, respectively. (4) Amount is less than $0.01. (5) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (6) Computed using average shares outstanding.
See Notes to Financial Statements 56 PHOENIX-FEDERATED U.S. GOVERNMENT BOND SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking investments in debt obligations of the U.S. government, its agencies and instrumentalities, including mortgage-backed securities. INVESTMENT ADVISER'S REPORT The government market benefited from an economic recession and continued weakness in the equity market, and the front end of the yield curve outperformed during 2001. The Federal Reserve (the "Fed") lowered rates aggressively throughout the year and the Fed Funds target rate ended the year at a 40-year low of 1.75% versus 6.5% at the end of 2000. As a result, shorter-term yields fell more than longer-term yields and the 2- to 30-year Treasury yield spread widened significantly to 276 basis points by the end of October versus 36 basis points at the end of 2000. The 2- to 30-year spread narrowed to 220 basis points due to the Treasury department announcing the elimination of the 30-year bond auction at the end of October, but ended the year at 244 basis points. Yields of 2-year and 30-year Treasury securities fell to 2.30% and 4.79%, respectively, in early November versus 5.09% and 5.46% at the end of 2000, but ended the year at 3.02% and 5.47% as economic data stabilized and pointed toward a recovery in 2002. Year end yield levels at the longer end of the curve were relatively unchanged from year end 2000. Over half of the fund was invested in agency securities, which benefited the fund as they outperformed Treasury securities during the reporting period. New risk management initiatives proposed by the government agencies in October 2000 helped reduce some of the political uncertainty generated earlier that year. The fund's average duration ended the year at 7.7 years and the fund's total return for the year ending December 31, 2001 was 5.01% versus 4.21% for the Merrill Lynch 10+ Year Treasury Index(1) and 7.23% for the Lehman Government Index(3). OUTLOOK The coupon curve is expected to flatten in 2002 both on a fundamental and technical basis. Fundamentally, the Fed easing cycle will be ending and inflation should remain subdued. Technically, Treasury issuance at the front end of the yield curve has increased substantially with the Treasury's elimination of the 30-year bond auction and a declining federal budget surplus. While economic growth probably bottomed in the fourth quarter of 2001, it is expected to remain weak through mid-2002. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Merrill Lynch 10+ Lehman Brothers U.S. Government Bond Series Treasury Index(1) Aggregate Bond Index(2) 12/15/99 $10,000.00 $10,000.00 $10,000.00 12/31/99 9,852.98 10,000.00 9,952.50 12/29/00 11,700.20 12,019.30 11,109.60 12/31/01 12,286.80 12,525.30 12,047.60
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 12/15/99 TO 1 YEAR 12/31/01 - ------------------------------------------------------------------------ U.S. Government Bond Series 5.01% 10.59% - ------------------------------------------------------------------------ Merrill Lynch 10+ Treasury Index(1) 4.21% 11.90% - ------------------------------------------------------------------------ Lehman Brothers Aggregate Bond Index(2) 8.44% 9.53% - ------------------------------------------------------------------------ This chart assumes an initial gross investment of $10,000 made on 12/15/99 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. 1 The Merrill Lynch 10+ Year Treasury Index is an unmanaged index that includes U.S. Treasury securities with maturities of greater than 10 years. 2 The Lehman Brothers Aggregate Bond Index is an unmanaged, commonly used measure of bond market total return performance and is provided for general comparative purposes. 3 The Lehman Government Index is unmanaged and composed of U.S. Treasury and government agency bonds and is provided for general comparative purposes. The indices are not available for direct investment. 57 PHOENIX-FEDERATED U.S. GOVERNMENT BOND SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ---------- ------ ----------- U.S. GOVERNMENT SECURITIES--22.6% U.S. TREASURY BONDS--22.6% U.S. Treasury Bonds 11.25%, 2/15/15 ........ AAA $ 450 $ 688,799 U.S. Treasury Bonds 9.25%, 2/15/16 ......... AAA 400 540,875 U.S. Treasury Bonds 7.25%, 5/15/16 ......... AAA 500 578,067 U.S. Treasury Bonds 8.75%, 5/15/17 ......... AAA 400 525,422 U.S. Treasury Bonds 9.125%, 5/15/18 ........ AAA 400 545,234 U.S. Treasury Bonds 8.875%, 2/15/19 ........ AAA 400 536,625 ----------- TOTAL U.S. GOVERNMENT SECURITIES (Identified cost $3,179,539) ............................... 3,415,022 ----------- AGENCY MORTGAGE-BACKED SECURITIES--30.6% Freddie Mac 6.75%, 9/15/29 ................. AAA 2,550 2,708,284 GNMA 7%, 7/15/31 ........................... AAA 934 955,328 GNMA 6.50%, 7/20/31 ........................ AAA 961 961,196 ----------- TOTAL AGENCY MORTGAGE-BACKED SECURITIES (Identified cost $4,535,136) ............................... 4,624,808 ----------- AGENCY NON MORTGAGE-BACKED SECURITIES--38.2% Fannie Mae 6.625%, 11/15/30 ................ AAA 1,200 1,255,439 Federal Farm Credit Bank 5%, 2/3/03 ........ AAA 1,300 1,336,457 Federal Home Loan Bank 7.125%, 2/15/30 ..... AAA 1,100 1,223,456 GNMA 6.50%, 8/20/31 ........................ AAA 975 975,092 Tennesse Valley Authority Series Series A 5.625%, 1/18/11 .......................... AAA 1,000 985,034 ----------- TOTAL AGENCY NON MORTGAGE-BACKED SECURITIES (Identified cost $5,697,212) ............................... 5,775,478 ----------- TOTAL LONG-TERM INVESTMENTS--91.4% (Identified cost $13,411,887) .............................. 13,815,308 ----------- PAR VALUE (000) VALUE ------- ----------- SHORT-TERM OBLIGATIONS--7.5% REPURCHASE AGREEMENTS--7.5% Goldman, Sachs and Co. repurchase agreement 1.68% dated 12/31/01, due 1/2/02, repurchase price $1,137,106, collateralized by U.S. Treasury Bonds 0% to 14.25%, 1/3/02 to 4/15/32, market value $1,160,081 1.68%, 1/2/02 .................. $ 1,137 $ 1,137,000 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $1,137,000) ............................... 1,137,000 ----------- TOTAL INVESTMENTS--98.9% (Identified cost $14,548,887) .............................. 14,952,308(a) Other assets and liabilities, net--1.1% .................... 160,633 ----------- NET ASSETS--100.0% ........................................... $15,112,941 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $420,225 and gross depreciation of $35,915 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $14,567,998. See Notes to Financial Statements 58 PHOENIX-FEDERATED U.S. GOVERNMENT BOND SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $14,548,887) ................... $14,952,308 Cash ........................................................................... 373 Receivables Interest ..................................................................... 220,311 Fund shares sold ............................................................. 5,023 Receivable from adviser ...................................................... 1,449 Prepaid expenses ............................................................... 123 ----------- Total assets ............................................................... 15,179,587 ----------- LIABILITIES Payables Fund shares repurchased ...................................................... 13,190 Professional fee ............................................................. 27,499 Printing fee ................................................................. 14,166 Financial agent fee .......................................................... 4,063 Trustees' fee ................................................................ 3,262 Accrued expenses ............................................................... 4,466 ----------- Total liabilities .......................................................... 66,646 ----------- NET ASSETS ..................................................................... $15,112,941 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ............................. $14,689,804 Undistributed net investment income .......................................... 23,754 Accumulated net realized loss ................................................ (4,038) Net unrealized appreciation .................................................. 403,421 ----------- NET ASSETS ..................................................................... $15,112,941 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ...................................................... 1,402,739 =========== Net asset value and offering price per share ................................... $10.77 ======
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Interest ..................................................................... $ 859,926 --------- Total investment income .................................................... 859,926 --------- EXPENSES Investment advisory fee ...................................................... 88,956 Financial agent fee .......................................................... 48,102 Professional ................................................................. 28,522 Printing ..................................................................... 18,253 Custodian .................................................................... 13,984 Trustees ..................................................................... 8,437 Miscellaneous ................................................................ 9,597 --------- Total expenses ............................................................. 215,851 Less expenses borne by investment adviser .................................. (91,190) Custodian fees paid indirectly ............................................. (3,253) --------- Net expenses ............................................................... 121,408 --------- NET INVESTMENT INCOME .......................................................... 738,518 --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities .............................................. 419,454 Net change in unrealized appreciation (depreciation) on investments .......... (445,334) --------- NET LOSS ON INVESTMENTS ........................................................ (25,880) --------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................... $ 712,638 =========
See Notes to Financial Statements 59 PHOENIX-FEDERATED U.S. GOVERNMENT BOND SERIES STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ----------- ----------- FROM OPERATIONS Net investment income (loss) ............................................................. $ 738,518 $ 450,381 Net realized gain (loss) ................................................................. 419,454 74 Net change in unrealized appreciation (depreciation) ..................................... (445,334) 906,225 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .............................. 712,638 1,356,680 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income .................................................................... (722,631) (444,468) Net realized short-term gains ............................................................ (96,049) (74) Net realized long-term gains ............................................................. (314,062) -- ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ................................ (1,132,742) (444,542) ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (549,808 and 586,368 shares, respectively) ................. 6,131,265 6,225,252 Net asset value of shares issued from reinvestment of distributions (104,173 and 41,626 shares, respectively) .............................................. 1,132,742 444,542 Cost of shares repurchased (290,301 and 105,595 shares, respectively) .................... (3,243,311) (1,145,819) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................ 4,020,696 5,523,975 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS .................................................... 3,600,592 6,436,113 NET ASSETS Beginning of period ...................................................................... 11,512,349 5,076,236 ----------- ----------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $23,754 AND $5,866, RESPECTIVELY) .......................................................................... $15,112,941 $11,512,349 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
YEAR ENDED DECEMBER 31, FROM INCEPTION ------------------------- 12/15/99 TO 2001(6) 2000 12/31/99 ------ ------ -------------- Net asset value, beginning of period .... $11.08 $9.83 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .......... 0.56(5) 0.56 0.03 Net realized and unrealized gain (loss) (0.02) 1.24 (0.17) ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .... 0.54 1.80 (0.14) ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .. (0.54) (0.55) (0.03) Dividends from net realized gains ..... (0.31) --(7) -- ------ ------ ------ TOTAL DISTRIBUTIONS ................. (0.85) (0.55) (0.03) ------ ------ ------ CHANGE IN NET ASSET VALUE ............... (0.31) 1.25 (0.17) ------ ------ ------ NET ASSET VALUE, END OF PERIOD .......... $10.77 $11.08 $ 9.83 ====== ====== ====== Total return ............................ 5.01% 18.75% (1.47)%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ... $15,113 $11,512 $5,076 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ................ 0.84%(4) 0.75% 0.75%(1) Net investment income ................. 4.98% 5.97% 6.61%(1) Portfolio turnover rate ................. 59% 1% 0%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.46%, 2.52% and 8.21% for the periods ended December 31, 2001, 2000 and 1999, respectively. (4) For the year ended December 31, 2001 the ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees, if expense offsets were included, the ratio would have been 0.82%. (5) Computed using average shares outstanding. (6) As required, effective January 1, 2001, the Fund has adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities and including paydown gains and losses in interest income. The effect of this change for the year ended December 31, 2001 was to decrease net investment income per share by $0.03, increase net realized and unrealized gains and losses per share by $0.03 and decrease the ratio of net investment income to average net assets from 5.24% to 4.98%. Per share ratios and supplemental data for prior periods have not been restated to reflect this change. (7) Amount is less than $0.01.
See Notes to Financial Statements 60 PHOENIX-GOODWIN MONEY MARKET SERIES INVESTOR PROFILE Phoenix-Goodwin Money Market Series has an investment objective of seeking as high a level of current income as is consistent with the preservation of capital and maintenance of liquidity. Obligations issued or guaranteed by the U.S. government, its agencies, authorities and instrumentalities, only guarantee principal and interest will be timely paid to holders of the securities. The entities do not guarantee that the value of fund shares will remain at $10.00 or that the fund will realize a particular yield. In addition, not all U.S. government securities are backed by the full faith and credit of the United States. It is possible to lose money by investing in the fund. INVESTMENT ADVISER'S REPORT Money Market Series earned 3.82% for the 12 months ended December 31, 2001. The Salomon Brothers 90-Day Treasury Bill Index(2) returned 4.15% for the same period. All performance figures assume reinvestment of distributions. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Money Market Series(1) IBC Report First Tier* 1/31/01 5.84% 5.62% 2/28/01 5.49 5.13 3/31/01 5.04 4.76 4/30/01 4.73 4.38 5/31/01 4.26 3.91 6/30/01 3.94 3.54 7/31/01 3.42 3.26 8/31/01 3.26 3.05 9/30/01 3.02 2.77 10/31/01 2.44 2.25 11/30/01 2.03 1.82 12/31/01 1.81 1.54 (1) The above graph covers the period from January 1, 2001 to December 31, 2001. The results are not indicative of the rate of return which may be realized from an investment made in the Money Market Series today. (2) The Salomon Brothers 90-Day Treasury Bill Index is an unmanaged measure of money market total return performance. The index is not available for direct investment. * Average monthly yield of First Tier Money Market Funds as reported by IBC's Money Market Insight. 61 PHOENIX-GOODWIN MONEY MARKET SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001
FACE VALUE INTEREST MATURITY (000) DESCRIPTION RATE DATE VALUE - ------ ----------- -------- -------- ------------ FEDERAL AGENCY SECURITIES--13.5% $2,500 Fannie Mae ................................................. 6.63%(c) 1/15/02 $ 2,502,404 3,500 FHLB ....................................................... 2.35(c) 1/24/02(d) 3,500,000 2,500 SLMA ....................................................... 2.65(c) 1/25/02(d) 2,500,000 2,500 SLMA ....................................................... 3.76(c) 1/25/02(d) 2,500,000 3,500 Freddie Mac ................................................ 1.72 1/29/02 3,495,318 5,000 FFCB ....................................................... 6.63(c) 2/1/02 5,018,483 2,500 FHLB ....................................................... 2.57(c) 2/1/02(d) 2,500,000 2,500 FHLB ....................................................... 5.13(c) 2/26/02 2,505,388 2,125 FHLB ....................................................... 3.70(c) 2/28/02 2,125,000 2,500 FHLB ....................................................... 2.50(c) 5/1/02(d) 2,500,000 3,000 FHLB ....................................................... 4.13(c) 5/3/02 2,999,212 610 Fannie Mae ................................................. 6.78(c) 5/30/02 618,318 2,500 FHLB ....................................................... 6.88(c) 7/18/02 2,542,902 ------------ TOTAL FEDERAL AGENCY SECURITIES ............................................................. 35,307,025 ------------ RESET DATE ------- FEDERAL AGENCY SECURITIES--VARIABLE(b)--4.9% 4,000 Fannie Mae (Final Maturity 5/13/02) ........................ 1.54 1/1/02 3,999,326 121 SBA (Final Maturity 1/25/21) ............................... 2.50 1/1/02 121,297 823 SBA (Final Maturity 10/25/22) .............................. 3.50 1/1/02 822,930 2,261 SBA (Final Maturity 11/25/21) .............................. 3.63 1/1/02 2,259,435 1,859 SBA (Final Maturity 2/25/23) ............................... 3.50 1/1/02 1,858,799 637 SBA (Final Maturity 2/25/23) ............................... 3.50 1/1/02 637,134 1,286 SBA (Final Maturity 3/25/24) ............................... 2.38 1/1/02 1,286,326 171 SBA (Final Maturity 5/25/21) ............................... 3.50 1/1/02 171,351 1,538 SBA (Final Maturity 9/25/23) ............................... 3.38 1/1/02 1,538,351 ------------ TOTAL FEDERAL AGENCY SECURITIES--VARIABLE ................................................... 12,694,949 ------------ STANDARD & POOR'S RATING MATURITY (UNAUDITED) DATE ---------- --------- VARIABLE MONEY MARKET CERTIFICATES(b)--3.8% 2,500 Bank of America Corp. ............................ A+ 2.00 3/19/02 2,499,349 5,000 Canadian Imperial Bank of Commerce (e) ........... AA- 1.79 5/20/02 4,999,811 2,500 Citicorp ......................................... AA- 2.11 8/13/02 2,499,889 ------------ TOTAL VARIABLE MONEY MARKET CERTIFICATES ..................................................... 9,999,049 ------------ COMMERCIAL PAPER--60.3% 2,010 Asset Securitization Corp. ....................... A-1+ 1.75 1/2/02 2,009,902 2,500 Bavaria Universal Funding Corp. .................. A-1 1.93 1/2/02 2,499,866 5,000 Goldman Sachs Group L.P. ......................... A-1+ 1.75 1/2/02 4,999,757 5,000 Govco, Inc. ...................................... A-1+ 1.75 1/2/02 4,999,757 1,501 Receivables Capital Corp. ........................ A-1+ 1.98 1/2/02 1,500,917 1,585 Verizon Network Funding Corp. .................... A-1+ 2.00 1/2/02 1,584,912 2,500 Enterprise Funding ............................... A-1+ 1.85 1/3/02 2,499,743 5,000 Goldman Sachs Group L.P. ......................... A-1+ 2.05 1/4/02 4,999,146 2,500 Govco, Inc. ...................................... A-1+ 2.35 1/7/02 2,499,021 5,000 Lexington Parker Capital Co. LLC ................. A-1 2.00 1/7/02 4,998,333 6,415 Special Purpose Accounts Receivables ............. A-1 1.77 1/7/02 6,413,108 3,000 Household Finance Corp. .......................... A-1 2.20 1/8/02 2,998,717 10,000 Pitney Bowes Credit Corp. ........................ A-1+ 2.00 1/8/02 9,996,111 500 Asset Securitization Corp. ....................... A-1+ 1.95 1/9/02 499,783 2,500 Marsh & McLennan Co., Inc. ....................... A-1+ 2.13 1/9/02 2,498,817 3,500 Marsh & McLennan Co., Inc. ....................... A-1+ 2.15 1/9/02 3,498,328 2,540 Preferred Receivables Funding Corp. .............. A-1 1.81 1/9/02 2,538,978 3,000 Preferred Receivables Funding Corp. .............. A-1 2.03 1/9/02 2,998,647 2,500 Govco, Inc. ...................................... A-1+ 2.00 1/10/02 2,498,750 970 Household Finance Corp. .......................... A-1 1.90 1/10/02 969,539 1,040 Heinz (H.J.) Co. ................................. A-1 2.24 1/11/02 1,039,353 5,000 Asset Securitization Corp. ....................... A-1+ 1.90 1/14/02 4,996,569 2,500 Receivables Capital Corp. ........................ A-1+ 1.90 1/14/02 2,498,285 2,820 Park Avenue Receivables .......................... A-1 2.05 1/15/02 2,817,752 3,000 Receivables Capital Corp. ........................ A-1+ 2.35 1/15/02 2,997,258
See Notes to Financial Statements 62 PHOENIX-GOODWIN MONEY MARKET SERIES
STANDARD FACE & POOR'S VALUE RATING INTEREST MATURITY (000) (UNAUDITED) RATE DATE VALUE - ------ ----------- -------- --------- ------------ COMMERCIAL PAPER--CONTINUED $3,500 Verizon Network Funding Corp. .................... A-1+ 1.77% 1/16/02 $ 3,497,419 1,098 Receivables Capital Corp. ........................ A-1+ 2.00 1/17/02 1,097,024 2,500 Special Purpose Accounts Receivables ............. A-1 1.95 1/17/02 2,497,833 2,500 Heinz (H.J.) Co. ................................. A-1 2.15 1/18/02 2,497,462 2,500 Heinz (H.J.) Co. ................................. A-1 2.02 1/22/02 2,497,054 2,500 Lexington Parker Capital Co. LLC ................. A-1 2.35 1/22/02 2,496,573 1,630 Lexington Parker Capital Co. LLC ................. A-1 2.37 1/22/02 1,627,747 3,855 Gannett Co. ...................................... A-1 1.84 1/23/02 3,850,665 650 Lexington Parker Capital Co. LLC ................. A-1 1.95 1/23/02 649,225 2,259 Park Avenue Receivables .......................... A-1 1.97 1/23/02 2,256,280 3,500 Receivables Capital Corp. ........................ A-1+ 1.95 1/24/02 3,495,640 2,500 Gannett Co. ...................................... A-1 1.75 1/25/02 2,497,083 2,500 Park Avenue Receivables .......................... A-1 1.97 1/25/02 2,496,717 960 Receivables Capital Corp. ........................ A-1+ 2.05 1/25/02 958,688 3,695 Heinz (H.J.) Co. ................................. A-1 2.00 1/28/02 3,689,457 3,115 Heinz (H.J.) Co. ................................. A-1 2.15 1/28/02 3,109,977 3,400 Kimberly-Clark Corp. ............................. A-1+ 1.85 1/28/02 3,395,283 770 Wisconsin Electric Power Co. ..................... A-1 1.85 1/28/02 768,932 2,470 Procter & Gamble Co. ............................. A-1+ 1.88 1/30/02 2,466,259 1,459 Enterprise Funding ............................... A-1+ 1.85 2/5/02 1,456,376 2,500 Govco, Inc. ...................................... A-1+ 1.92 2/5/02 2,495,333 2,750 Private Export Funding Corp. ..................... A-1+ 2.77 2/6/02 2,742,383 2,500 Marsh USA, Inc. .................................. A-1+ 1.90 2/8/02 2,494,986 3,500 Household Finance Corp. .......................... A-1 1.83 2/13/02 3,492,350 2,500 Lexington Parker Capital Co. LLC ................. A-1 2.02 2/13/02 2,493,968 3,500 Schering Corp. ................................... A-1+ 2.02 2/14/02 3,491,359 1,180 Verizon Network Funding Corp. .................... A-1+ 1.83 2/26/02 1,176,641 2,500 Bavaria Universal Funding Corp. .................. A-1 1.93 3/4/02 2,491,690 2,500 Private Export Fund Corp. ........................ A-1+ 1.87 3/7/02 2,491,559 1,512 Bavaria Universal Funding Corp. .................. A-1 1.85 3/18/02 1,506,095 3,095 Verizon Network Funding Corp. .................... A-1+ 1.89 6/18/02 3,067,702 ------------ TOTAL COMMERCIAL PAPER ....................................................................... 157,097,109 ------------ MEDIUM TERM NOTES--14.0% 835 Merrill Lynch & Co., Inc. ........................ AA- 8.00 2/1/02 838,646 2,500 Beta Finance, Inc. ............................... AAA 5.26 2/25/02 2,500,000 1,000 Wal-Mart Stores, Inc. ............................ AA 5.45(b) 6/1/02(d) 1,012,627 3,500 SBC Communications, Inc. (f) ..................... AA- 4.25 6/5/02(d) 3,527,321 500 Bank of America Corp. ............................ A 8.13 6/15/02 512,477 4,250 BellSouth Telecommunications Corp. ............... A+ 6.00(b) 6/15/02 4,321,688 8,675 McDonald's Corp. ................................. A+ 6.00 6/23/02 8,788,174 1,500 Associates Corp. NA .............................. AA- 6.50 7/15/02 1,519,523 650 Du Pont (E.I.) de Nemours & Co. .................. AA- 6.50 9/1/02 666,138 1,116 Associates Corp. NA .............................. AA- 6.50 10/15/02 1,148,447 3,875 Bank of America Corp. ............................ A 7.50 10/15/02 4,033,453 375 Du Pont (E.I.) de Nemours & Co. .................. AA- 6.75 10/15/02 388,479 2,500 General Electric Capital Corp. ................... AAA 5.35 11/18/02 2,563,721 2,500 Minnesota Minining & Manufacturing Co. (f) ....... AA 5.65(b) 12/12/02 2,574,860 2,152 CitiFinancial .................................... AA- 5.88 1/15/03 2,226,570 ------------ TOTAL MEDIUM TERM NOTES ....................................................................... 36,622,124 . ------------ CERTIFICATES OF DEPOSIT--1.0% 2,500 Canadian Imperial Bank of Commerce (e) ........... AA- 4.23(c) 5/22/02 2,499,903 ------------ TOTAL CERTIFICATES OF DEPOSIT ................................................................. 2,499,903 ------------ TOTAL INVESTMENTS--97.5% (Identified cost $254,220,159) .............................................................. $254,220,159(a) Other assets and liabilities, net--2.5% 6,408,584 ------------ NET ASSETS--100% .............................................................................. $260,628,743 ============ (a) Federal Income Tax Information: At December 31, 2001, the aggregate cost of securities was the same for book and tax purposes. (b) Variable or step coupon security; interest rate shown reflects the rate currently in effect. (c) The interest rate shown is the coupon rate. (d) Callable. The maturity date shown is the call date. (e) Yankee CD. (f) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2001, these securities amounted to a value of $6,102,181 or 2.3% of net assets.
See Notes to Financial Statements 63 PHOENIX-GOODWIN MONEY MARKET SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $254,220,159) .................. $254,220,159 Receivables Fund shares sold ............................................................. 5,511,903 Interest ..................................................................... 1,139,539 Investment securities sold ................................................... 557,354 Prepaid expenses ............................................................... 1,679 ------------ Total assets ............................................................... 261,430,634 ------------ LIABILITIES Cash overdraft ................................................................. 2,523 Payables Fund shares repurchased ...................................................... 564,670 Printing fee ................................................................. 121,974 Investment advisory fee ...................................................... 60,504 Financial agent fee .......................................................... 17,830 Trustees' fee ................................................................ 3,262 Accrued expenses ............................................................... 31,128 ------------ Total liabilities .......................................................... 801,891 ------------ NET ASSETS ..................................................................... $260,628,743 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ............................. $260,628,743 ------------ NET ASSETS ..................................................................... $260,628,743 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ...................................................... 26,062,898 ============ Net asset value and offering price per share ................................... $10.00 ======
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Interest ..................................................................... $8,713,765 ---------- Total investment income .................................................... 8,713,765 ---------- EXPENSES Investment advisory fee ...................................................... 834,722 Financial agent fee .......................................................... 203,492 Printing ..................................................................... 126,255 Custodian .................................................................... 42,971 Professional ................................................................. 26,610 Trustees ..................................................................... 8,437 Miscellaneous ................................................................ 11,519 ---------- Total expenses ............................................................. 1,254,006 Less expense borne by investment adviser ................................... (99,118) Custodian fees paid indirectly ............................................. (7,095) ---------- Net expenses ............................................................... 1,147,793 ---------- NET INVESTMENT INCOME .......................................................... 7,565,972 ---------- NET REALIZED GAIN ON INVESTMENTS Net realized gain on securities .............................................. 898 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................... $7,566,870 ==========
See Notes to Financial Statements 64 PHOENIX-GOODWIN MONEY MARKET SERIES STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED 12/31/01 12/31/00 -------------- ------------- FROM OPERATIONS Net investment income (loss) .................................................. $ 7,565,972 $ 10,023,970 Net realized gain (loss) ...................................................... 898 -- -------------- ------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................... 7,566,870 10,023,970 -------------- ------------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ......................................................... (7,565,972) (10,023,970) Net realized short-term gains ................................................. (898) -- -------------- ------------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ..................... (7,566,870) (10,023,970) -------------- ------------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (101,934,992 and 68,283,798 shares, respectively) 1,019,349,924 682,837,977 Net asset value of shares issued from reinvestment of distributions (756,687 and 1,002,397 shares, respectively) ................................ 7,566,870 10,023,970 Cost of shares repurchased (94,625,616 and 74,847,784 shares, respectively) ... (946,256,175) (748,477,835) -------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ..................... 80,660,619 (55,615,888) -------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS ......................................... 80,660,619 (55,615,888) NET ASSETS Beginning of period ........................................................... 179,968,124 235,584,012 -------------- ------------- END OF PERIOD ................................................................. $ 260,628,743 $ 179,968,124 ============== =============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
YEAR ENDED DECEMBER 31, ----------------------------------------------------------------------------- 2001 2000 1999 1998 1997 ------ ------ ------ ------ ------ Net asset value, beginning of period .... $10.00 $10.00 $10.00 $10.00 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .......... 0.38 0.59 0.47 0.50 0.50 Net realized gain ..................... --(3) -- -- -- -- ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .... 0.38 0.59 0.47 0.50 0.50 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .. (0.38) (0.59) (0.47) (0.50) (0.50) Dividends from net realized gains ..... --(3) -- -- -- -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS ................. (0.38) (0.59) (0.47) (0.50) (0.50) ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD .......... $10.00 $10.00 $10.00 $10.00 $10.00 ====== ====== ====== ====== ====== Total return ............................ 3.82% 6.03% 4.82% 5.09% 4.99% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ... $260,629 $179,968 $235,584 $196,811 $126,607 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (1) ................ 0.55%(2) 0.55% 0.55% 0.55% 0.55% Net investment income ................. 3.63% 5.83% 4.73% 4.99% 5.07% (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.60%, 0.58% and 0.57% for the periods ended December 31, 2001, 2000 and 1999, respectively. (2) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (3) Amount is less than $0.01.
See Notes to Financial Statements 65 PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES INVESTOR PROFILE The investment objective is total return. Phoenix-Goodwin Multi-Sector Fixed Income Series is appropriate for investors with a moderate risk tolerance profile who are seeking to maximize current income consistent with preservation of capital by investing in a broadly diversified bond fund. The portfolio's duration is market neutral, that is, approximately equal to the benchmark index, the Lehman Brothers Aggregate Bond Index.(1) Investors should note that the portfolio may hold foreign bonds, and foreign investments pose additional risks, such as currency fluctuation, less public disclosure, and political and economic uncertainty. The portfolio may also invest in high-yielding fixed-income securities that are generally subject to greater market fluctuations and risk of loss of income and principal than are investments in lower-yielding fixed-income securities. INVESTMENT ADVISER'S REPORT While this has been a difficult year for the equity markets, even before the events of September 11th, the bond market has done well. In fact, 2001 was the second straight year that bonds bested stocks, the first such occurrence since 1981-1982. For the 12 months ended December 31, 2001, the Lehman Brothers Aggregate Bond Index returned 8.44%, while the S&P 500 Index(2) lost 11.87%. Phoenix-Goodwin Multi-Sector Fixed Income Series was up 6.09% for the year. Positive contributors to performance included agency and non-agency commercial mortgage-backed securities and taxable municipal issues. Our underperformance relative to our peers was due to an underweighting in investment-grade corporates and the portfolio's exposure to telecommunications issues, which remained under pressure. Although the year closed on a downbeat note, with most of the economic news released during the fourth quarter negative, a closer look reveals that the proverbial light at the end of the tunnel may just be coming into focus. The University of Michigan's Consumer Sentiment Survey demonstrated steadily improving consumer confidence in the fourth quarter. Low interest rates--spurred by the Fed's aggressive monetary policy, and decelerating inflation driven by falling energy prices, reduced tax rates, and U.S. military victories in Afghanistan all seem to have the consumer looking up. Further, although the manufacturing segment continued to shrink, the rate of contraction slowed substantially as demand for new orders began to improve. OUTLOOK Our fixed-income market outlook for 2002 remains positive; despite grumblings by some of a looming bear market. The pessimists are not entirely without justification, as a 5.6% yield for Treasuries doesn't portend a strong year for high-quality bonds. Moreover, with underlying interest rates at historically low levels, the prognosis for further price gains from declining rates is unlikely. That said, however, we believe the outlook for the spread sectors of the fixed-income market is much rosier. We feel that spread sectors continue to offer excellent value with credit spreads at or near historical highs. The Fed has taken decisive action (11 rate cuts in 2001) to stimulate the economy, lowering the overnight borrowing rate to its lowest level in 40 years (1.75%). Additionally, the benign inflation environment makes it unlikely that the Fed will need to raise rates anytime soon, even if economic growth accelerates rapidly. Therefore, both consumers and businesses should continue to benefit from low interest rates for the foreseeable future. The effects of the Fed's monetary stimulus should begin to filter into the economy in 2002. We expect this will result in improving corporate profits, which, in turn, should lead to tightening spreads. Corporate issuance in 2002 is expected to be much lower than in 2001, which should also be a plus. We believe valuations in the non-Treasury sectors are currently very attractive, but sector and issue selection remains critically important. The portfolio is well-diversified across sectors and individual securities and heavily weighted in higher quality issues. 66 PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Multi-Sector Lehman Brothers Fixed Income Series Aggregate Bond Index(1) 12/31/91 $10,000.00 $10,000.00 12/31/92 11,003.00 10,740.00 12/31/93 12,752.20 11,787.30 12/30/94 12,054.20 11,443.50 12/29/95 14,891.60 13,558.10 12/31/96 16,740.80 14,050.30 12/31/97 18,570.50 15,406.60 12/31/98 17,824.70 16,744.90 12/31/99 18,797.40 16,606.80 12/29/00 20,014.00 18,537.50 12/31/01 21,232.30 20,102.70 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 1 YEAR 5 YEARS 10 YEARS - -------------------------------------------------------------------------- Multi-Sector Fixed Income Series 6.09% 4.87% 7.82% - -------------------------------------------------------------------------- Lehman Brothers Aggregate Bond Index(1) 8.44% 7.43% 7.23% - -------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 12/31/91. Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. High yield fixed income securities generally are subject to greater market fluctuations and risk of loss of income and principal than are investments in lower-yielding fixed income securities. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks, 1 The Lehman Brothers Aggregate Bond Index is an unmanaged, commonly used measure of bond performance. 2 The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 67 PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 MOODY'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ------ ------------ U.S. GOVERNMENT SECURITIES--0.3% U.S. TREASURY BONDS--0.2% U.S. Treasury Bonds 5.375%, 2/15/31 ........ Aaa $ 310 $ 305,641 ------------ U.S. TREASURY NOTES--0.1% U.S. Treasury Notes 4.625%, 5/15/06 ........ Aaa 250 253,486 ------------ TOTAL U.S. GOVERNMENT SECURITIES (Identified cost $601,711) ................................. 559,127 ------------ AGENCY MORTGAGE-BACKED SECURITIES--0.4% GNMA 8%, 9/15/06 ........................... Aaa 3 3,461 GNMA 8%, 10/15/06 .......................... Aaa 73 76,692 GNMA 6.50%, '23- '26 ....................... Aaa 655 662,304 ------------ TOTAL AGENCY MORTGAGE-BACKED SECURITIES (Identified cost $728,043) ................................. 742,457 ------------ AGENCY ASSET BACKED SECURITIES--4.0% Fannie Mae 6.625%, 9/15/09 ................. Aaa 6,250 6,676,138 ------------ TOTAL AGENCY ASSET BACKED SECURITIES (Identified cost $6,229,978) ............................... 6,676,138 ------------ MUNICIPAL BONDS--10.6% CALIFORNIA--1.5% Alameda Corridor Transportation Authority Revenue Taxable Series C 6.50%, 10/1/19 .. Aaa 750 772,860 Alameda Corridor Transportation Authority Revenue Taxable Series C 6.60%, 10/1/29 .. Aaa 1,750 1,723,470 ------------ 2,496,330 ------------ CONNECTICUT--2.0% Mashantucket Western Pequot Tribe Revenue Taxable Series A 6.91%, 9/1/12 ........... Aaa 1,100 1,167,089 Mashantucket Western Pequot Tribe Revenue Taxable Series A 144A 6.57%, 9/1/13 (b) .. Aaa 2,140 2,186,952 ------------ 3,354,041 ------------ FLORIDA--2.2% Tampa Solid Waste System Revenue Taxable Series A 6.46%, 10/1/09 .................. Aaa 2,250 2,311,672 University of Miami Exchangeable Revenue Taxable Series A 7.65%, 4/1/20 (d) ....... Aaa 1,310 1,354,999 ------------ 3,666,671 ------------ ILLINOIS--0.9% Illinois Educational Facilities Authority - Layola University Revenue Taxable Series C 7.12%, 7/1/11 ................... Aaa 1,330 1,420,360 ------------ MASSACHUSETTS--1.9% Massachusetts Port Authority Taxable Series C 6.35%, 7/1/06 ................... Aa 1,500 1,541,580 Worcester Pension General Obligation Taxable 6.25%, 1/1/28 .................... Aaa 1,750 1,655,430 ------------ 3,197,010 ------------ PENNSYLVANIA--1.2% Pittsburgh Pension General Obligation Taxable Series B 6.35%, 3/1/13 ........... Aaa 2,000 2,007,500 ------------ TEXAS--0.9% Texas State University System Revenue 6.16%, 3/15/06 ........................... Aaa 1,495 1,538,938 ------------ TOTAL MUNICIPAL BONDS (Identified cost $17,211,786) .............................. 17,680,850 ------------ MOODY'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ ASSET BACKED SECURITIES--1.5% Green Tree Financial Corp. 97-5, M1 6.95%, 5/15/29 .................................. Aa $1,020 $ 979,200 Prudential Holdings LLC Series FSA 144A 7.245%, 12/18/23 (b) ..................... Aaa 1,500 1,527,900 ------------ TOTAL ASSET BACKED SECURITIES (Identified cost $2,469,272) ............................... 2,507,100 ------------ CORPORATE BONDS--30.4% AIRLINES--3.8% American Airlines, Inc. 01-2, A-2 144A 7.858%, 10/1/11 (b) ...................... A 2,000 2,004,760 America West Airlines, Inc. 00-G 8.057%, 7/2/20 ................................... Aaa 1,176 1,209,437 Continental Airlines, Inc. 97-1A 7.461%, 4/1/15 ................................... A 1,296 1,166,569 Northwest Airlines Corp. 00-1 G 8.072%, 10/1/19 .................................. Aaa 1,966 2,025,040 ------------ 6,405,806 ------------ ALUMINUM--0.3% Centuary Aluminum Co. 11.75%, 4/15/08 ...... Ba 500 520,000 ------------ BANKS (MAJOR REGIONAL)--1.6% BNP U.S. Funding LLC Series A 144A 7.738%, 12/31/49 (b)(d) .................. A 2,500 2,634,480 ------------ BROADCASTING (TELEVISION, RADIO & CABLE)--2.7% Adelphia Communications Corp. 10.875%, 10/1/10 .................................. B 875 892,500 Charter Communication Holdings 10%, 5/15/11 .................................. B 1,500 1,533,750 Comcast Cable Communications, Inc. ......... 7.125%, 6/15/13 .......................... Baa 1,000 1,026,933 Insight Communications Co., Inc. 0%, 2/15/11 (d) .............................. B 1,750 1,041,250 ------------ 4,494,433 ------------ CHEMICALS--0.5% IMC Global, Inc. 6.50%, 8/1/03 ............. Ba 820 803,679 ------------ CHEMICALS (SPECIALTY)--0.4% Equistar Chemicals 8.50%, 2/15/04 .......... Ba 680 678,300 ------------ COMMUNICATIONS EQUIPMENT--0.5% American Tower Corp. 9.375%, 2/1/09 ........ B 1,000 810,000 ------------ CONSUMER FINANCE--1.0% Conseco Finance Corp. Series MTNA 6.50%, 9/26/02 .................................. B 1,000 765,000 Ford Motor Credit Corp. 7.25%, 10/25/11 .... A 875 851,485 ------------ 1,616,485 ------------ DISTRIBUTORS (FOOD & HEALTH)--1.1% AmerisourceBergen Corp. 144A 8.125%, 9/1/08 (b) ............................... Ba 1,000 1,030,000 Fleming Cos., Inc. 144A 10.625%, 7/31/07 (b) .............................. B 925 888,000 ------------ 1,918,000 ------------ ENGINEERING & CONSTRUCTION--0.3% Encompass Services Corp. 144A 10.50%, 5/1/09 (b) ............................... B 625 425,000 ------------ FINANCIAL (DIVERSIFIED)--2.3% Erac U.S.A. Finance Co. 144A 7.35%, 6/15/08 (b) .............................. Baa 1,000 1,012,640 See Notes to Financial Statements 68 PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES MOODY'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ FINANCIAL (DIVERSIFIED)--CONTINUED General Motors Acceptance Corp. 6.875%, 9/15/11 .................................. A $1,750 $ 1,714,228 Pemex Project Funding Master Trust 9.125%, 10/13/10 ................................. Baa 1,000 1,060,000 ------------ 3,786,868 ------------ FOODS--0.6% Land O Lakes, Inc. 144A 8.75%, 11/15/11 (b) Ba 1,000 970,000 ------------ GAMING, LOTTERY & PARI-MUTUEL COMPANIES--0.1% Mohegan Tribal Gaming Authority 8.125%, 1/1/06 ................................... Ba 145 149,712 ------------ HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--0.7% Fresenius Medical Capital Trust IV 7.875%, 6/15/11 .................................. Ba 1,250 1,237,500 ------------ HEALTH CARE (SPECIALIZED SERVICES)--1.4% HEALTHSOUTH Corp.144A 8.375%, 10/1/11 (b) .............................. Ba 1,750 1,802,500 Insight Health Services, Inc. 144A 9.875%, 11/1/11 (b) .............................. B 500 520,000 ------------ 2,322,500 ------------ IRON & STEEL--1.5% AK Steel Corp. 9.125%, 12/15/06 ............ Ba 1,000 1,027,500 Allegheny Technologies 144A 8.375%, 12/15/11 (b) ............................. Baa 1,500 1,469,847 ------------ 2,497,347 ------------ LEISURE TIME (PRODUCTS)--0.7% Bally Total Fitness Holding Corp. Series D 9.875%, 10/15/07 ......................... B 1,150 1,178,750 ------------ MACHINERY (DIVERSIFIED)--0.9% Terex Corp. Series B 10.375%, 4/1/11 ....... B 1,500 1,567,500 ------------ OIL & GAS (DRILLING & EQUIPMENT)--0.6% R&B Falcon Corp. Series B 6.75%, 4/15/05 ... Baa 1,000 1,030,000 ------------ OIL & GAS (EXPLORATION & PRODUCTION)--1.5% Chesapeake Energy Corp. 144A 8.375%, 11/1/08 (b) .............................. B 1,500 1,488,750 Hanover Equipment Trust 01-A, 144A 8.50%, 9/1/08 (b) ............................... Ba 1,000 1,045,000 ------------ 2,533,750 ------------ PAPER & FOREST PRODUCTS--0.6% Nortek, Inc. Series B 9.875%, 6/15/11 ...... B 1,000 995,000 ------------ POWER PRODUCERS (INDEPENDENT)--0.5% AES Corp. 9.375%, 9/15/10 .................. Ba 1,000 905,000 ------------ PUBLISHING--0.6% Reed Elsevier Capital 6.75%, 8/1/11 ........ A 1,000 1,014,390 ------------ PUBLISHING (NEWSPAPERS)--0.4% Belo Corp. 8%, 11/1/08 ..................... Baa 600 612,806 ------------ RETAIL (SPECIALTY)--1.2% Amerigas Partners Eagle Finance Corp. 144A 8.875%, 5/20/11 (b) ...................... Ba 1,000 1,035,000 AutoNation, Inc. 144A 9%, 8/1/08 (b) ....... Ba 1,000 1,022,500 ------------ 2,057,500 ------------ SERVICES (COMMERCIAL & CONSUMER)--0.5% Service Corporation International 7.20%, 6/1/06 ................................... B 1,000 905,000 ------------ TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.6% Triton PCS, Inc. 144A 8.75%, 11/15/11 (b) .. B 1,000 1,005,000 ------------ MOODY'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ TELECOMMUNICATIONS (LONG DISTANCE)--1.1% NTL Communications Corp. Series B 11.50%, 10/1/08 .......................... Caa $ 220 $ 78,100 NTL, Inc. Series B 11.50%, 2/1/06 .......... Caa 380 134,900 WorldCom, Inc. 7.50%, 5/15/11 .............. A 1,500 1,543,013 ------------ 1,756,013 ------------ TELEPHONE--0.6% Qwest Capital Funding 7.25%, 2/15/11 ....... Baa 1,000 974,472 ------------ TEXTILES (APPAREL)--1.1% Collins & Aikman Products 11.50%, 4/15/06 .. B 1,000 980,000 Collins & Aikman Products 144A 10.75%, 12/31/11 (b) ............................. B 875 883,750 ------------ 1,863,750 ------------ WASTE MANAGEMENT--0.7% Allied Waste Industries 7.40%, 9/15/35 ..... Ba 1,500 1,200,000 ------------ TOTAL CORPORATE BONDS (Identified cost $50,576,768) .............................. 50,869,041 ------------ NON-AGENCY MORTGAGE-BACKED SECURITIES--17.2% CS First Boston Mortgage Securities Corp. 97-SPCE, C 7.077%, 2/20/07 ............... AAA(c) 2,000 2,020,000 CS First Boston Mortgage Securities Corp. 97-1R, 1M4 7.481%, 2/28/22 (d) ........... Baa 1,470 1,444,855 Commercial Mortgage Asset Trust 99-C1, D 7.35%, 10/17/13 .......................... Baa 500 494,954 Commercial Resecuritization Trust 01-ABC2, A1 7.17%, 2/21/13 ........................ Aaa 1,750 1,786,641 First Chicago/Lennar Trust 97-CHL1, D 8.112%, 5/29/08 (d) ...................... BB(c) 2,000 1,829,376 LB Commercial Conduit Mortgage Trust 99-C2, A2 7.325%, 9/15/09 ................ Aaa 2,100 2,231,253 Mortgage Capital Funding, Inc. 98-MC2, B 6.549%, 5/18/08 .......................... Aa 2,500 2,553,125 Morgan Stanley Capital I 98-W F2, C 6.77%, 7/15/30 .................................. A(c) 1,700 1,727,094 Norwest Asset Securities Corp. 99-5, B3 6.25%, 3/25/14 ........................... BBB(c) 1,375 1,376,650 Norwest Asset Securities Corp. 99-10, B3 6.25%, 4/25/14 ........................... BBB(c) 791 748,311 Norwest Asset Securities Corp. 97-7, B 1 7%, 5/25/27 ............................ A 1,892 1,875,283 Paine Webber Mortgage Acceptance Corp. ..... 00-1, M 7.75%, 9/25/30 ................... AA(c) 1,269 1,321,890 Residential Funding Mortgage Securities I 94-S7, M3 6.50%, 3/25/24 6.50%, 3/25/34 .................................. Baa 3,670 3,677,373 Ryland Mortgage Securities Corp. III 92-A, 1A 8.25%, 3/29/30 (d) .................... AAA(c) 164 162,940 Securitized Asset Sales, Inc. 95-6, B3 7%, 12/25/10 ................................. Aa 932 944,015 Seneca Funding I Ltd Series Regs 4.846%, 5/31/29 .................................. Aa 2,000 1,740,000 Structured Asset Securities Corp. 00-C2, L 3.683%, 3/20/03 (d) ...................... BB(c) 1,179 1,167,294 Summit Mortgage Trust 00-1, B3 6.14%, 12/28/12 (d) ............................. A(c) 1,653 1,656,751 ------------ TOTAL NON-AGENCY MORTGAGE-BACKED SECURITIES (Identified cost $27,702,235) .............................. 28,757,805 ------------ FOREIGN GOVERNMENT SECURITIES--17.6% BRAZIL--4.8% Federal Republic of Brazil C Bond 8%, 4/15/14 .................................. B 7,388 5,698,350 Federal Republic of Brazil 11%, 8/17/40 .... B 3,000 2,317,500 ------------ 8,015,850 ------------ See Notes to Financial Statements 69 PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES MOODY'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ BULGARIA--1.3% Republic of Bulgaria IAB PDI 4.563%, 7/28/11 (d) .............................. B $1,733 $ 1,524,600 Republic of Bulgaria IAB RPDI 4.563%, 7/28/11 (d) .............................. B 248 217,800 Republic of Bulgaria FLIRB Series A 4.563%, 7/28/12 (d) .............................. B 435 392,587 ------------ 2,134,987 ------------ COLOMBIA--2.1% Republic of Colombia 11.75%, 2/25/20 ....... Ba 3,425 3,425,000 ------------ EL SALVADOR--0.6% Republic of El Salvador 144A 8.50%, 7/25/11 (b) .............................. Baa 1,000 1,082,500 ------------ JAMAICA--0.6% Government of Jamaica 144A 11.75%, 5/15/11 (b) .............................. Ba 1,000 1,060,000 ------------ MEXICO--1.9% United Mexican States 8.125%, 12/30/19 ..... Baa 2,500 2,435,000 United Mexican States, Series MTN 8.30%, 8/15/31 .................................. Baa 750 738,750 ------------ 3,173,750 ------------ PANAMA--1.4% Republic of Panama 8.875%, 9/30/27 ......... Ba- 2,500 2,312,500 ------------ PERU--0.9% Republic of Peru PDI Series 20YR 4.50%, 3/7/17 (d) ............................... Ba 2,000 1,515,000 ------------ POLAND--1.8% Republic of Poland Series 0206 8.50%, 2/12/06 .................................. NR 8,050(f) 1,948,253 Republic of Poland Bearer PDIP 6%, 10/27/14 (d) ............................. Baa 990 984,431 ------------ 2,932,684 ------------ RUSSIA--1.7% Russian Federation RegS 5%, 3/31/30 (d) .... Ba 5,000 2,906,250 ------------ UKRAINE--0.5% Government of Ukraine 11%, 3/15/07 ......... Caa 940 904,750 ------------ TOTAL FOREIGN GOVERNMENT SECURITIES (Identified cost $27,935,482) .............. 29,463,271 ------------ FOREIGN CORPORATE BONDS--13.0% CANADA--1.6% GT Group Telecom, Inc. 0%, 2/1/10 (d) ...... Caa 3,000 405,000 Methanex Corp. 7.75%, 8/15/05 .............. Ba 1,000 945,000 Microcell Telecommunications, Inc. Series B 14%, 6/1/06 (d) .......................... Caa 1,500 1,290,000 ------------ 2,640,000 ------------ CAYMAN ISLANDS--1.1% Petrobas International Finance 144A 9.75%, 7/6/11 (b) ........................ Baa 1,875 1,856,250 ------------ CHILE--2.2% Empresa Nacional de Electricidad SA Series B 8.50%, 4/1/09 ............................ Baa 2,000 2,049,360 HQI Transelectric SA 7.875%, 4/15/11 ....... Baa 1,675 1,694,212 ------------ 3,743,572 ------------ IRELAND--0.4% Clondalkin Industries plc 10.625%, 1/15/10 . B 750(g) 721,205 ------------ ISRAEL--0.6% Partner Communications Co. Ltd. Series DTC 13%, 8/15/10 ............................. B 1,000 1,010,000 ------------ MOODY'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ MEXICO--1.5% Grupo Industrial Durango 12.625%, 8/1/03 ... B $ 645 $ 648,225 Grupo Televisa SA 144A 8%, 9/13/11 (b) ..... Baa 1,000 998,750 Grupo Transportacion Ferroviaria Mexicana SA de CV 0%, 6/15/09 (d) ................. B 1,000 882,500 2,529,475 ------------ NETHERLANDS--2.0% Deutsche Telekom International Finance BV 8.25%, 6/15/30 ........................... A 1,000 1,109,876 Koninklijke KPN NV 8%, 10/1/10 ............. Baa 795 805,693 Netia Holdings BV 13.75%, 6/15/10 .......... Ca 1,000(g) 160,268 United Pan-Europe Communications 6.371%, 11/30/08 (d) ..................... Ca 1,500 1,170,000 ------------ 3,245,837 ------------ POLAND--1.0% TPSA Finance BV 144A 7.75%, 12/10/08 (b) ... Baa 1,700 1,718,801 ------------ RUSSIA--0.2% Metromedia International Group, Inc. ....... Series B 0%, 9/30/07 (h)(i) .............. NR 927 234,108 ------------ UNITED KINGDOM--1.0% Royal & Sun Alliance Insurance Group 8.95%, 10/15/29 .......................... A 1,500 1,609,155 ------------ VENEZUELA--1.4% PDVSA Finance Ltd. 98-1E 7.50%, 11/15/28 ................................. Baa 3,250 2,380,625 ------------ TOTAL FOREIGN CORPORATE BONDS (Identified cost $25,280,547) .............................. 21,689,028 ------------ CONVERTIBLE BONDS--0.5% OIL & GAS (DRILLING & EQUIPMENT)--0.5% Parker Drilling Co. Cv. 5.50%, 8/1/04 ...... B 1,000 893,750 ------------ TOTAL CONVERTIBLE BONDS (Identified cost $892,953) ................................. 893,750 ------------ CREDIT LINKED NOTES--1.0% BROADCASTING (TELEVISION, RADIO & CABLE)--0.4% Earls Four Limited Series 499 144A Repackaged Telewest Finance (Jersey) Ltd. 12.05%, 7/7/05 (b)(h) ............................ 1,000 720,000 ------------ ELECTRICAL EQUIPMENT--0.6% STEERS Credit Linked Trust 2001, Series SLR-2 Repackaged Selectron Corp. 0%, 5/20/20 (h) 1,000 930,000 ------------ TOTAL CREDIT LINKED NOTES (Identified cost $2,000,000) ............... 1,650,000 ------------ SHARES ------ PREFERRED STOCK--0.4% TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.4% Nextel Communications, Inc. Series E PIK 11.125%.......................................... 12,170 669,350 ------------ TELECOMMUNICATIONS (LONG DISTANCE)--0.0% Global Crossing Holdings Ltd. PIK Series E 10.50% . 14,846 29,691 ------------ TOTAL PREFERRED STOCK (Identified cost $2,528,674) ............................... 699,041 ------------ COMMON STOCKS--0.1% TELECOMMUNICATIONS (LONG DISTANCE)--0.1% AT&T Latin America Corp. Class A .................. 64,050 75,579 ------------ TOTAL COMMON STOCKS (Identified cost $281,820) ................................. 75,579 ------------ See Notes to Financial Statements 70 PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES SHARES VALUE ------ ------------ WARRANTS--0.0% COMMUNICATIONS EQUIPMENT--0.0% GT Group Telecom, Inc. 144A Warrants (Canada) (b)(e) ................................. 3,000 $ 15,000 Local Space & Communications, Inc. Warrants (e) ... 1,000 2,000 ------------ 17,000 ------------ TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.0% Leap Wireless International, Inc. 144A Warrants (b) (e) ................................ 1,500 3,750 ------------ TOTAL WARRANTS (Identified cost $7,500) ................................... 20,750 ------------ TOTAL LONG-TERM INVESTMENTS--97.0% (Identified cost $164,446,766) ............................. 162,283,937 ------------ MOODY'S PAR RATING VALUE (UNAUDITED) (000) ----------- ----- SHORT-TERM OBLIGATIONS--1.2% COMMERCIAL PAPER--1.2% Govco, Inc. 1.75%, 1/2/02 .................. A-1+ $1,950 1,949,905 ------------ TOTAL SHORT-TERM OBLIGATIONS (Identified cost $1,949,905) ............................... 1,949,905 ------------ TOTAL INVESTMENTS--98.2% (Identified cost $166,396,675) ............................. 164,233,842(a) Other assets and liabilities, net--1.8% .................... 2,995,348 ------------ NET ASSETS--100.0% ........................................... $167,229,190 ============ (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $5,741,962 and gross depreciation of $8,082,695 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $166,574,575. (b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2001, these securities amounted to a value of $30,407,130 or 18.18% of net assets. (c) As rated by Standard & Poors or Fitch. (d) Variable or step coupon security; interest rate shown reflects the rate currently in effect. (e) Non-income producing. (f) Par value represents Polish Zloty. (g) Par value represents Euro. (h) Illiquid. At December 31, 2001, these securities amounted to a value of $1,884,108 or 1.13% of net assets. (i) Security valued at fair value as determined in good faith by or under the direction of the Trustees. At December 31, 2001, this security which is included in illiquid securities above amounted to $234,108 or 0.14% of net assets. See Notes to Financial Statements 71 PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $166,396,675) .................. $164,233,842 Cash ........................................................................... 148,023 Receivables Interest and dividends ....................................................... 3,084,815 Fund shares sold ............................................................. 153,262 Prepaid expenses ............................................................... 1,422 ------------ Total assets ............................................................... 167,621,364 ------------ LIABILITIES Payables Fund shares repurchased ...................................................... 213,507 Investment advisory fee ...................................................... 63,192 Printing fee ................................................................. 57,966 Professional fee ............................................................. 27,331 Financial agent fee .......................................................... 14,227 Trustees' fee ................................................................ 3,262 Accrued expenses ............................................................... 12,689 ------------ Total liabilities .......................................................... 392,174 ------------ NET ASSETS ..................................................................... $167,229,190 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ............................. $196,900,134 Undistributed net investment income .......................................... 1,325,991 Accumulated net realized loss ................................................ (28,839,074) Net unrealized depreciation .................................................. (2,157,861) ------------ NET ASSETS ..................................................................... $167,229,190 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ........................................ 19,551,126 ============ Net asset value and offering price per share ................................... $8.55 =====
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Interest ..................................................................... $14,374,596 Dividends .................................................................... 231,085 ----------- Total investment income .................................................... 14,605,681 ----------- EXPENSES Investment advisory fee ...................................................... 830,877 Financial agent fee .......................................................... 171,389 Printing ..................................................................... 70,765 Custodian .................................................................... 53,331 Professional ................................................................. 29,589 Trustees ..................................................................... 8,437 Miscellaneous ................................................................ 17,716 ----------- Total expenses ............................................................. 1,182,104 Less expenses borne by investment adviser .................................. (96,613) Custodian fees paid indirectly ............................................. (5,351) ----------- Net expenses ............................................................... 1,080,140 ----------- NET INVESTMENT INCOME .......................................................... 13,525,541 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .............................................. (5,684,648) Net realized gain on swaps ................................................... 744,417 Net realized loss on options ................................................. (88,750) Net realized loss on foreign currency transactions ........................... (647,308) Net change in unrealized appreciation (depreciation) on investments .......... 2,220,960 Net change in unrealized appreciation (depreciation) on foreign currency and foreign currency transactions .......................................... 102,558 Net change in unrealized appreciation (depreciation) on swap agreements ...... (453,473) ----------- NET LOSS ON INVESTMENTS ........................................................ (3,806,244) ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................... $ 9,719,297 ===========
See Notes to Financial Statements 72 PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ------------ ------------ FROM OPERATIONS Net investment income (loss) .................................................................. $ 13,525,541 $ 13,668,791 Net realized gain (loss) ...................................................................... (5,676,289) (5,880,094) Net change in unrealized appreciation (depreciation) .......................................... 1,870,045 2,305,818 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................... 9,719,297 10,094,515 ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ......................................................................... (13,336,322) (13,098,481) ------------ ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ..................................... (13,336,322) (13,098,481) ------------ ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (4,560,206 and 2,983,752 shares, respectively) .................. 40,237,530 26,381,533 Net asset value of shares issued from reinvestment of distributions (1,546,724 and 1,491,618 shares, respectively) ................................................ 13,336,322 13,098,481 Cost of shares repurchased (4,859,933 and 5,555,049 shares, respectively) ..................... (42,828,727) (49,211,316) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ..................................... 10,745,125 (9,731,302) ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ......................................................... 7,128,100 (12,735,268) NET ASSETS Beginning of period ........................................................................... 160,101,090 172,836,358 ------------ ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $1,325,991 AND $754,845, RESPECTIVELY) ............................................................................... $167,229,190 $160,101,090 ============ ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
YEAR ENDED DECEMBER 31, ---------------------------------------------------------- 2001(4) 2000 1999 1998 1997 ------ ------ ------ ------ ------ Net asset value, beginning of period ............................ $8.75 $8.92 $9.18 $10.38 $10.34 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .................................. 0.72(3) 0.75 0.73 0.77 0.75 Net realized and unrealized gain (loss) ....................... (0.21) (0.19) (0.24) (1.17) 0.34 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ............................ 0.51 0.56 0.49 (0.40) 1.09 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .......................... (0.71) (0.73) (0.75) (0.74) (0.77) Dividends from net realized gains ............................. -- -- -- (0.06) (0.28 ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS ......................................... (0.71) (0.73) (0.75) (0.80) (1.05) ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ....................................... (0.20) (0.17) (0.26) (1.20) 0.04 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD .................................. $ 8.55 $ 8.75 $ 8.92 $ 9.18 $10.38 ====== ====== ====== ====== ====== Total return .................................................... 6.09% 6.47% 5.46% (4.02)% 10.93% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ........................... $167,229 $160,101 $172,836 $187,363 $191,627 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (1) ........................................ 0.65%(2) 0.65% 0.65% 0.64% 0.65% Net investment income ......................................... 8.14% 8.45% 7.79% 7.61% 7.25% Portfolio turnover rate ......................................... 188% 148% 125% 160% 151% (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.71%, 0.69%, 0.71% and 0.66% for the periods ended December 31, 2001, 2000, 1999 and 1997, respectively. (2) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (3) Computed using average shares outstanding. (4) As required, effective January 1, 2001, the Fund has adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities and including paydown gains and losses in interest income. The effect of this change for the year ended December 31, 2001 was to increase the ratio of net investment income to average net assets from 8.13% to 8.14%. There was no effect to net investment income per share and net realized and unrealized gain (loss) per share. Per share ratios and supplemental data for prior periods have not been restated to reflect this change.
See Notes to Financial Statements 73 PHOENIX-HOLLISTER VALUE EQUITY SERIES INVESTOR PROFILE The investment objective is long term capital appreciation with a secondary investment objective of current income. INVESTMENT ADVISER'S REPORT For the first time since the bear market of 1973-74, nearly all of the major stock indices ended the year with negative returns for the second year in a row. For the fiscal year ended December 31, 2001, Phoenix-Hollister Value Equity Edge Series declined 17.96 versus the S&P 500 Index(2), which had a negative return of 11.87%. The Russell 1000 Value Index(1) had a negative return of 5.59%. All performance figures assume reinvestment of distributions and exclude the effect of sales charges. An overweighting in financials, utilities and consumer staples subtracted from performance. Our underweighting in technology early in the year also hurt performance. As the year progressed, we built up the portfolio's tech weighting to nearer the benchmark weight and as a result, were negatively affected by the sector's poor results, particularly in February when the tech sector of the S&P 500 was down 28%. In addition, during the summer we had expected some economic recovery and positioned the portfolio to participate in the anticipated upturn in cyclical stocks, including airlines and hotels. Following the terrorist attacks of September 11th, these were the areas hardest hit, and our performance suffered as well. OUTLOOK We believe the fourth-quarter rally may have marked the beginning of a turnaround in the economy. Historically, the market anticipates a recovery three to six months before the end of a recession. Therefore, we expect to see evidence of an economic recovery sometime in late spring or early summer. Although consumer spending may remain under some pressure near term, particularly as unemployment figures creep up, it will be the consumer who will drive the rebound in the economy. The Fed's aggressive rate-cutting in 2001 has resulted in a tremendous amount of liquidity in the system, which will benefit both the economy and the stock market. Another positive sign is the drawdown in inventories we are seeing. Corporate profits are also beginning to turnaround. Based on our outlook, we have focused on high quality consumer cyclical stocks, which typically lead the market rally as the economic cycle picks up momentum. The portfolio is also heavily weighted in financial stocks, which are very attractive given the current low interest rate environment and which should benefit even more from an economic recovery. We also own some stocks in the basic materials and capital goods sectors where we see good values. As always, stock selection is critical, and our emphasis is on identifying the dominant companies with niche positions in an industry. Communications is an area that we believe offers very attractive values at current levels. We believe the group has been oversold and will be adding to our position. Some of our favorite holdings are specialty providers, such as tower and fiber optics companies. The portfolio is underweighted in technology and energy, as well as in large pharmaceutical drug companies, although we do own some biotech stocks with strong new-product growth potential, a strong cash positions and solid balance sheets. We have also sold our food stocks, which we consider to be more defensive names. We believe our investment approach can add value in an uncertain market environment. While our portfolios will have a price/earnings multiple that is below the benchmark index, which helps provide downside protection, investors are also afforded the opportunity to participate in the market's upside potential because each of our holdings possesses a catalyst for price appreciation. 74 PHOENIX-HOLLISTER VALUE EQUITY SERIES [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Value Equity Series Russell 1000 Value Index(1) S&P 500 Index(2) 3/2/98 $10,000.00 $10,000.00 $10,000.00 12/31/98 11,079.20 10,965.50 11,895.30 12/31/99 13,774.80 11,771.30 14,409.40 12/29/00 18,205.20 12,596.90 13,085.60 12/31/01 14,935.30 11,892.80 11,531.70 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 3/2/98 TO 1 YEAR 12/31/01 - ----------------------------------------------------------------------------- Value Equity Series (17.96)% 11.02% - ----------------------------------------------------------------------------- Russell 1000 Value Index(1) (5.59)% 4.62% - ----------------------------------------------------------------------------- S&P 500 Index(2) (11.87)% 3.79% - ----------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 3/2/98 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in the share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. 1 The Russell 1000 Value Index is an unmanaged measure of large-cap value-oriented stock total return performance. 2 The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 75 PHOENIX-HOLLISTER VALUE EQUITY SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE ------- ----------- COMMON STOCKS--98.8% AEROSPACE/DEFENSE--0.8% Boeing Co. (The) ................................... 17,200 $ 667,016 ----------- AGRICULTURAL PRODUCTS--0.3% Universal Corp. .................................... 7,000 254,870 ----------- AIR FREIGHT--1.4% Airborne, Inc. ..................................... 40,000 593,200 FedEx Corp. (b) .................................... 12,000 622,560 ----------- 1,215,760 ----------- AIRLINES--2.2% Continental Airlines, Inc. Class B (b) ............. 24,000 629,040 Delta Air Lines, Inc. .............................. 23,000 672,980 Southwest Airlines Co. ............................. 30,000 554,400 ----------- 1,856,420 ----------- ALUMINUM--1.1% Alcoa, Inc. ........................................ 27,000 959,850 ----------- AUTO PARTS & EQUIPMENT--0.2% Bandag, Inc. ....................................... 5,000 173,800 ----------- BANKS (MAJOR REGIONAL)--5.5% AmSouth Bancorp .................................... 20,000 378,000 Comerica, Inc. ..................................... 30,000 1,719,000 FleetBoston Financial Corp. ........................ 33,000 1,204,500 Wells Fargo & Co. .................................. 31,000 1,346,950 ----------- 4,648,450 ----------- BANKS (MONEY CENTER)--1.3% Bank of America Corp. .............................. 18,000 1,133,100 ----------- BANKS (REGIONAL)--4.1% Commerce Bancshares, Inc. .......................... 10,500 409,395 Compass Bancshares, Inc. ........................... 20,000 566,000 Cullen/Frost Bankers, Inc. ......................... 35,000 1,080,800 Southwest Bancorp. of Texas, Inc. (b) .............. 35,000 1,059,450 Sterling Bancshares, Inc. .......................... 25,000 313,000 ----------- 3,428,645 ----------- BIOTECHNOLOGY--2.3% Amgen, Inc. (b) .................................... 23,000 1,298,120 Biogen, Inc. (b) ................................... 10,000 573,500 Incyte Pharma (b) .................................. 5,000 97,200 ----------- 1,968,820 ----------- CHEMICALS--2.4% Dow Chemical Co. (The) ............................. 25,000 844,500 Du Pont (E.I.) de Nemours & Co. .................... 20,000 850,200 Lyondell Chemical Co. .............................. 20,000 286,600 ----------- 1,981,300 ----------- COMPUTERS (SOFTWARE & SERVICES)--5.7% Computer Associates International, Inc. ............ 22,000 758,780 Jack Henry & Assoc ................................. 20,000 436,800 Liberate Technologies, Inc. (b) .................... 100,000 1,148,000 Microsoft Corp. (b) ................................ 14,000 927,500 Oracle Corp. (b) ................................... 83,000 1,146,230 Simplex Solutions (b) .............................. 5,000 82,750 Sybase, Inc. (b) ................................... 20,000 315,200 ----------- 4,815,260 ----------- CONSTRUCTION (CEMENT & AGGREGATES)--0.7% Texas Industries, Inc. ............................. 15,000 553,500 ----------- SHARES VALUE ------- ----------- CONSUMER FINANCE--1.3% MBNA Corp. ......................................... 30,000 $ 1,056,000 ----------- ELECTRIC COMPANIES--1.2% Entergy Corp. ...................................... 10,000 391,100 Mirant Corp. (b) ................................... 41,000 656,820 ----------- 1,047,920 ----------- ELECTRONICS (INSTRUMENTATION)--2.6% Bruker Daltonics, Inc. (b) ......................... 90,000 1,471,500 Harvard Bioscience, Inc. (b) ....................... 50,000 497,000 Waters Corp. (b) ................................... 5,000 193,750 ----------- 2,162,250 ----------- ELECTRONICS (SEMICONDUCTORS)--1.9% Advanced Micro Devices, Inc. (b) ................... 22,600 358,436 Applied Micro Circuits Corp. (b) ................... 20,000 226,400 Conexant Systems, Inc. (b) ......................... 15,000 215,400 Pixelworks Inc (b) ................................. 40,000 642,400 TriQuint Semiconductor, Inc. (b) ................... 10,000 122,600 ----------- 1,565,236 ----------- FINANCIAL (DIVERSIFIED)--5.1% Allied Capital Corp. ............................... 50,000 1,300,000 Ambac Financial Group, Inc. ........................ 27,000 1,562,220 American Express Co. ............................... 10,000 356,900 Citigroup, Inc. .................................... 21,000 1,060,080 ----------- 4,279,200 ----------- FOODS--0.6% Kraft Foods, Inc. Class A .......................... 15,000 510,450 ----------- FOOTWEAR--0.4% Sketchers U.S.A., Inc. Class A (b) ................. 25,000 365,500 ----------- HARDWARE & TOOLS--1.0% Toro Co. (The) ..................................... 18,200 819,000 ----------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--2.9% Cell Therapeutics, Inc. (b) ........................ 55,000 1,327,700 ICOS Corp. (b) ..................................... 20,000 1,148,800 ----------- 2,476,500 ----------- HEALTH CARE (HOSPITAL MANAGEMENT)--0.5% HCA, Inc. .......................................... 10,000 385,400 ----------- HOUSEHOLD PRODUCTS (NON-DURABLE)--0.7% Kimberly-Clark Corp. ............................... 10,000 598,000 ----------- INSURANCE (LIFE/HEALTH)--1.6% AFLAC, Inc. ........................................ 25,700 631,192 Torchmark Corp. .................................... 19,000 747,270 ----------- 1,378,462 ----------- INSURANCE (PROPERTY-CASUALTY)--2.8% Allstate Corp. (The) ............................... 55,000 1,853,500 Radian Group, Inc. ................................. 10,700 459,565 ----------- 2,313,065 ----------- INVESTMENT BANKING/BROKERAGE--5.0% Instinet Group, Inc. (b) ........................... 75,000 753,750 Legg Mason, Inc. ................................... 5,000 249,900 Lehman Brothers Holdings, Inc. ..................... 15,000 1,002,000 Merrill Lynch & Co., Inc. .......................... 37,000 1,928,440 SWS Group, Inc. .................................... 10,000 254,500 ----------- 4,188,590 ----------- See Notes to Financial Statements 76 PHOENIX-HOLLISTER VALUE EQUITY SERIES SHARES VALUE ------- ----------- LEISURE TIME (PRODUCTS)--4.6% Hasbro, Inc. ....................................... 107,800 $ 1,749,594 Six Flags, Inc. .................................... 140,000 2,153,200 ----------- 3,902,794 ----------- LODGING - HOTELS--0.9% Hilton Hotels Corp. ................................ 63,000 687,960 Marriott International, Inc. Class A ............... 1,000 40,650 ----------- 728,610 ----------- MACHINERY (DIVERSIFIED)--4.1% Caterpillar, Inc. .................................. 50,000 2,612,500 Deere & Co. ........................................ 15,000 654,900 Terex Corp. (b) .................................... 10,000 175,400 ----------- 3,442,800 ----------- MANUFACTURING (DIVERSIFIED)--5.0% Illinois Tool Works, Inc. .......................... 25,000 1,693,000 Johnson Controls, Inc. ............................. 10,000 807,500 Textron, Inc. ...................................... 20,000 829,200 United Technologies Corp. .......................... 14,000 904,820 ----------- 4,234,520 ----------- MANUFACTURING (SPECIALIZED)--1.8% Watts Industries, Inc. Class A ..................... 30,000 450,000 York International Corp. ........................... 28,000 1,067,640 ----------- 1,517,640 ----------- OIL (INTERNATIONAL INTEGRATED)--1.4% ChevronTexaco Corp. ................................ 12,700 1,138,047 ----------- PAPER & FOREST PRODUCTS--1.3% Georgia-Pacific Corp. .............................. 10,000 276,100 International Paper Co. ............................ 20,000 807,000 ----------- 1,083,100 ----------- RAILROADS--1.3% CSX Corp. .......................................... 32,000 1,121,600 ----------- REITS--1.2% Annaly Mortgage Management, Inc. ................... 20,000 320,000 Apartment Investment & Management Co. Class A ...... 5,000 228,650 Prentiss Properties Trust .......................... 7,000 192,150 Summit Properties, Inc. ............................ 10,000 250,200 ----------- 991,000 ----------- RESTAURANTS--1.1% McDonald's Corp. ................................... 35,000 926,450 ----------- RETAIL (BUILDING SUPPLIES)--0.7% Sherwin-Williams Co. (The) ......................... 20,000 550,000 ----------- RETAIL (DEPARTMENT STORES)--0.9% Nordstrom, Inc. .................................... 36,800 744,464 ----------- RETAIL (GENERAL MERCHANDISE)--1.4% Target Corp. ....................................... 29,000 1,190,450 ----------- RETAIL (SPECIALTY-APPAREL)--0.7% Talbots, Inc. (The) ................................ 16,600 601,750 ----------- SAVINGS & LOAN COMPANIES--0.5% Coastal Bancorp, Inc. .............................. 13,000 375,700 ----------- SHARES VALUE ------- ----------- SERVICES (ADVERTISING/MARKETING)--2.1% Catalina Marketing Corp. (b) ....................... 32,000 $ 1,110,400 TMP Worldwide, Inc. (b) ............................ 15,000 643,500 ----------- 1,753,900 ----------- SERVICES (COMMERCIAL & CONSUMER)--2.7% Cendant Corp. (b) .................................. 105,000 2,059,050 Watson Wyatt & Co. Holdings (b) .................... 10,000 218,000 ----------- 2,277,050 ----------- SERVICES (EMPLOYMENT)--1.2% Manpower, Inc. ..................................... 30,000 1,011,300 ----------- SPECIALTY PRINTING--1.7% Valassis Communications, Inc. (b) .................. 40,000 1,424,800 ----------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)--1.4% Nextel Communications, Inc. Class A (b) ............ 110,000 1,205,600 ----------- TELECOMMUNICATIONS (LONG DISTANCE)--0.5% Sprint Corp. (FON Group) ........................... 20,000 401,600 ----------- TEXTILES (APPAREL)--0.6% Russell Corp ....................................... 35,000 525,350 ----------- TOBACCO--3.3% Philip Morris Cos., Inc. ........................... 30,000 1,375,500 UST, Inc. .......................................... 40,000 1,400,000 ----------- 2,775,500 ----------- WASTE MANAGEMENT--2.8% Waste Management, Inc. ............................. 74,700 2,383,677 ----------- TOTAL COMMON STOCKS (Identified cost $82,285,042) .............................. 83,110,066 ----------- FOREIGN COMMON STOCKS--0.3% INSURANCE (LIFE/HEALTH)--0.3% Manulife Financial Corp. (Canada) .................. 10,000 260,600 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $287,403) ................................. 260,600 ----------- TOTAL LONG-TERM INVESTMENTS--99.1% (Identified cost $82,572,445) .............................. 83,370,666 ----------- STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) ----------- ----- SHORT-TERM OBLIGATIONS--3.9% COMMERCIAL PAPER--1.2% Receivables Capital Corp. 2.08%, 1/11/02 A-1 $ 1,004 1,003,420 ----------- FEDERAL AGENCY SECURITIES--2.7% Freddie Mac 1.47%, 1/2/02 .............. AAA 2,305 2,304,906 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $3,308,326) ............................... 3,308,326 ----------- TOTAL INVESTMENTS--103.0% (Identified cost $85,880,770) .............................. 86,678,992(a) Other assets and liabilities, net--(3.0)% .................. (2,519,864) ----------- NET ASSETS--100.0% ........................................... $84,159,128 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $3,898,973 and gross depreciation of $3,236,005 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $86,016,024. (b) Non-income producing. See Notes to Financial Statements 77 PHOENIX-HOLLISTER VALUE EQUITY SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $85,880,770) ................... $86,678,992 Cash ........................................................................... 1,776 Receivables Investment securities sold ................................................... 10,025,382 Fund shares sold ............................................................. 295,970 Dividends and interest ....................................................... 124,490 Tax reclaims ................................................................. 2,312 Prepaid expenses ............................................................... 588 ----------- Total assets ............................................................... 97,129,510 ----------- LIABILITIES Payables Investment securities purchased .............................................. 12,791,120 Fund shares repurchased ...................................................... 69,458 Investment advisory fee ...................................................... 45,366 Financial agent fee .......................................................... 8,186 Trustees' fee ................................................................ 3,262 Accrued expenses ............................................................... 52,990 ----------- Total liabilities .......................................................... 12,970,382 ----------- NET ASSETS ..................................................................... $84,159,128 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ............................. $89,596,784 Undistributed net investment income .......................................... 136,855 Accumulated net realized loss ................................................ (6,372,733) Net unrealized appreciation .................................................. 798,222 ----------- NET ASSETS ..................................................................... $84,159,128 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ...................................................... 6,781,027 =========== Net asset value and offering price per share ................................... $12.41 ======
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends .................................................................... $ 1,161,257 Interest ..................................................................... 146,388 Foreign taxes withheld ....................................................... (5,869) ------------ Total investment income .................................................... 1,301,776 ------------ EXPENSES Investment advisory fee ...................................................... 465,134 Financial agent fee .......................................................... 88,522 Printing ..................................................................... 38,783 Professional ................................................................. 27,100 Custodian .................................................................... 26,333 Trustees ..................................................................... 8,437 Miscellaneous ................................................................ 7,753 ------------ Total expenses ............................................................. 662,062 Less expense borne by investment adviser ................................... (96,280) Custodian fees paid indirectly ............................................. (903) ------------ Net expenses ............................................................... 564,879 ------------ NET INVESTMENT INCOME .......................................................... 736,897 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .............................................. (6,316,439) Net change in unrealized appreciation (depreciation) on investments .......... (6,361,675) ------------ NET LOSS ON INVESTMENTS ........................................................ (12,678,114) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................... $(11,941,217) ============
See Notes to Financial Statements 78 PHOENIX-HOLLISTER VALUE EQUITY SERIES STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ----------- ------------ FROM OPERATIONS Net investment income (loss) ................................. $ 736,897 $ 217,788 Net realized gain (loss) ..................................... (6,316,439) 3,290,918 Net change in unrealized appreciation (depreciation) ......... (6,361,675) 4,815,976 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .. (11,941,217) 8,324,682 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ........................................ (600,943) (210,302) Net realized short-term gains ................................ (440,505) (3,553,562) Net realized long-term gains ................................. -- (236,244) ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS .... (1,041,448) (4,000,108) ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (5,154,942 and 1,830,008 shares, respectively) .............................................. 68,982,484 26,662,655 Net asset value of shares issued from reinvestment of distributions (80,045 and 268,777 shares, respectively) .............................................. 1,041,448 4,000,108 Cost of shares repurchased (1,418,021 and 487,619 shares, respectively) .............................................. (18,342,907) (6,996,636) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ............................................... 51,681,025 23,666,127 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS ........................ 38,698,360 27,990,701 NET ASSETS Beginning of period .......................................... 45,460,768 17,470,067 ----------- ----------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $136,855 AND $12,184, RESPECTIVELY) ..................................... $84,159,128 $45,460,768 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
YEAR ENDED FROM DECEMBER 31, INCEPTION ----------------------------------------- 3/2/98 TO 2001 2000 1999 12/31/98 ------ ------ ------ -------- Net asset value, beginning of period .... $15.34 $12.91 $11.03 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .......... 0.11 0.07 0.04 0.05 Net realized and unrealized gain (loss) (2.86) 3.98 2.63 1.03 ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .... (2.75) 4.05 2.67 1.08 ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .. (0.09) (0.08) (0.04) (0.05) Dividends from net realized gains ..... (0.09) (1.54) (0.75) -- ------ ------ ------ ------ TOTAL DISTRIBUTIONS ................. (0.18) (1.62) (0.79) (0.05) ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ............... (2.93) 2.43 1.88 1.03 ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD .......... $12.41 $15.34 $12.91 $11.03 ====== ====== ====== ====== Total return ............................ (17.96)% 32.16% 24.33% 10.79%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ... $84,159 $45,461 $17,470 $9,533 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ................ 0.85%(4) 0.85% 0.85% 0.85%(1) Net investment income ................. 1.11% 0.79% 0.41% 0.85%(1) Portfolio turnover rate ................. 245% 166% 168% 77%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.00%, 1.33%, 2.03% and 2.46% for the periods ended December 31, 2001, 2000, 1999 and 1998, respectively. (4) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 79 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking high total return by investing in a broadly diversified portfolio of equity securities of large and medium capitalization companies within the market sectors found in the S&P 500. INVESTMENT ADVISER'S REPORT The Phoenix-J.P. Morgan Research Enhanced Index Series and returned -11.90% (net of fees) for the twelve months ended December 31, 2001. The S&P 500 Index(1) returned -11.87% during this time period. The year 2001 will remain in our minds and hearts for a very long time. The outsized events, which occurred during the year, caused much personal angst while the equity markets hammered stocks for the second year in a row leaving the broad market in negative territory for consecutive years for the first time in more than twenty-five years. The economy fell into recession, but the official declaration came late in the year. Investors anticipated the slowdown early on as weakness in technology spending, continuous price declines for most goods, layoffs and disappointing corporate earnings announcements plagued the markets. The Federal Reserve attempted to accommodate the economic slowdown by easing interest rates an unprecedented eleven times bringing the Fed Funds rate to the lowest level in forty years, 1.75%. The tragic events of September 11th exacerbated investors' fears with a dramatic sell-off pushing market indices and volatility to levels not seen since the autumn of 1998. The steep decline in all equity market indices when stock trading resumed after September 11th proved, however, to be the market bottom for the year. Investors began to respond positively to news of success in the U.S. military campaign against terrorists. After being pummeled all year, technology stocks staged an impressive fourth quarter rally with the NASDAQ Composite returning 30% to close above pre-September 11th levels. In fact, all major indices rose in the quarter, ending the year on more optimistic footing. A number of high profile events, some company specific, caused certain stocks and sectors to dramatically underperform. Examples include Enron's bankruptcy, Providian's collapse, disappointing news in product development for pharmaceuticals companies, and the cash flow crunch affecting the telecommunications sector. More cyclical sectors, like retail and basic materials, which responded to the Federal Reserve's aggressive action to boost the economy, partially offset the poor showing of other areas. In addition, the U.S. consumer showed remarkable resilience during the year providing support to consumer oriented sectors. Turbulent equity markets of 2001 provided a challenging backdrop as the Phoenix-J.P. Morgan Research Enhanced Index Series underperformed the S&P 500 slightly for the year. During the year, robust stock selection throughout the portfolio added value in 13 out of 19 sectors. At the sector level, security selection within Energy, Utilities and Health Services & Systems added significantly to performance over the year. An underweight position in Enron (-98.8%) was the largest contributor to performance over the year as the energy trader went from Wall Street darling to the largest bankruptcy in U.S. history in just over 12 months as the company's severe liquidity and legal problems became apparent. The decisions to underweight holdings in electric power plant owner Aes Corporation (-48.6%) and chipmaker Applied Micro Circuits (-59.3%) also contributed strongly to performance. However, an overweight position in Providian Financial (+93.4%) negatively impacted the portfolio as the marked deterioration in the sub-prime lending category post-September 11th terrorists attacks resulted in lower than expected fees and finance charges and larger than expected credit losses for the company. OUTLOOK The economy continues to show signs of stabilization as initial jobless claims, consumer confidence, and industrial surveys have improved significantly from fall levels. However, statistics of actual economic activity continue to reveal a fragile economy. Continued support from monetary policy over the coming months will be crucial in enabling the economy to begin a sustainable recovery. With the financial system awash with liquidity, investors are wary about being too defensive and will continue to look for signs of an economic recovery. As always, our strategy will continue to focus on identifying relative value within sectors based on companies' longer-term earnings prospects. 80 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Research Enhanced Index Series S&P 500 Index(1) 7/15/97 $10,000.00 $10,000.00 12/31/97 10,582.60 10,566.50 12/31/98 13,934.80 13,605.10 12/31/99 16,563.20 16,480.60 12/29/00 14,663.30 14,966.50 12/31/01 12,918.30 13,189.20 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 7/15/97 TO 1 YEAR 12/31/01 - -------------------------------------------------------------------------- Research Enhanced Index Series (11.90)% 5.90% - -------------------------------------------------------------------------- S&P 500 Index(1) (11.87)% 6.39% - -------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 7/15/97 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. (1) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance. The index is not available for direct investment. 81 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ---------- -------- ------------ U.S. GOVERNMENT SECURITIES--0.1% U.S. Treasury Note 6.25%, 7/31/02 (c) .... AAA $ 150 $ 153,885 ------------ TOTAL U.S. GOVERNMENT SECURITIES (Identified cost $153,730) ................................. 153,885 ------------ SHARES VALUE ------ ------------ COMMON STOCKS--96.7% AEROSPACE/DEFENSE--0.8% Boeing Co. (The) ................................... 7,000 271,460 General Dynamics Corp. ............................. 2,900 230,956 Goodrich Corp. ..................................... 3,500 93,170 Lockheed Martin Corp. .............................. 5,300 247,351 ------------ 842,937 ------------ AIR FREIGHT--0.2% FedEx Corp. (b) .................................... 4,000 207,520 ------------ AIRLINES--0.3% AMR Corp. (b) ...................................... 3,500 77,595 Delta Air Lines, Inc. .............................. 5,100 149,226 Southwest Airlines Co. ............................. 2,500 46,200 ------------ 273,021 ------------ ALUMINUM--0.4% Alcoa, Inc. ........................................ 12,200 433,710 ------------ AUTO PARTS & EQUIPMENT--0.2% Delphi Automotive Systems .......................... 7,800 106,548 Lear Corp. (b) ..................................... 1,800 68,652 Visteon Corp. ...................................... 4,600 69,184 ------------ 244,384 ------------ AUTOMOBILES--0.3% Ford Motor Co. ..................................... 10,600 166,632 General Motors Corp. ............................... 3,200 155,520 ------------ 322,152 ------------ BANKS (MAJOR REGIONAL)--3.4% AmSouth Bancorp .................................... 5,000 94,500 Bank of New York Co., Inc. (The) ................... 11,400 465,120 Bank One Corp. ..................................... 19,200 749,760 BB&T Corp. ......................................... 600 21,666 First Alabama Bancshares, Inc. ..................... 900 26,946 Huntington Bancshares, Inc. ........................ 400 6,876 KeyCorp ............................................ 900 21,906 Mellon Financial Corp. ............................. 1,700 63,954 Northern Trust Corp. ............................... 4,200 252,924 PNC Financial Services Group ....................... 7,200 404,640 SouthTrust Corp. ................................... 6,200 152,954 SunTrust Banks, Inc. ............................... 3,300 206,910 U.S. Bancorp ....................................... 38,100 797,433 Union Planters Corp. ............................... 2,600 117,338 Wells Fargo & Co. .................................. 4,800 208,560 ------------ 3,591,487 ------------ BANKS (MONEY CENTER)--0.9% Bank of America Corp. .............................. 8,300 522,485 Wachovia Corp. ..................................... 14,700 460,992 ------------ 983,477 ------------ BANKS (REGIONAL)--0.3% Banknorth Group, Inc. .............................. 1,400 31,528 Compass Bancshares, Inc. ........................... 1,000 28,300 FirstMerit Corp. ................................... 300 8,127 Hibernia Corp. Class A ............................. 2,300 40,917 Marshall & Ilsley Corp. ............................ 800 50,624 SHARES VALUE ------ ------------ BANKS (REGIONAL)--CONTINUED National Commerce Financial Corp. .................. 2,600 $ 65,780 TCF Financial Corp. ................................ 400 19,192 Wilmington Trust Corp. ............................. 400 25,324 ------------ 269,792 ------------ BEVERAGES (ALCOHOLIC)--0.2% Anheuser-Busch Cos., Inc. .......................... 5,200 235,092 ------------ BEVERAGES (NON-ALCOHOLIC)--2.1% Coca-Cola Co. (The) ................................ 27,500 1,296,625 PepsiCo, Inc. ...................................... 18,700 910,503 ------------ 2,207,128 ------------ BIOTECHNOLOGY--1.0% Amgen, Inc. (b) .................................... 13,400 756,296 Human Genome Sciences, Inc. (b) .................... 5,700 192,204 Immunex Corp. (b) .................................. 100 2,771 Vertex Pharmaceuticals, Inc. (b) ................... 2,400 59,016 ------------ 1,010,287 ------------ BROADCASTING (TELEVISION, RADIO & CABLE)--1.0% Adelphia Communications Corp. Class A (b) .......... 3,900 121,602 Charter Communications, Inc. Class A (b) ........... 9,000 147,870 Comcast Corp. Class A (b) .......................... 14,300 514,800 Fox Entertainment Group, Inc. Class A (b) .......... 2,600 68,978 Liberty Media Corp. Class A (b) .................... 11,300 158,200 ------------ 1,011,450 ------------ BUILDING MATERIALS--0.2% Masco Corp. ........................................ 8,900 218,050 ------------ CHEMICALS--1.0% Air Products and Chemicals, Inc. ................... 2,800 131,348 Dow Chemical Co. (The) ............................. 14,500 489,810 Du Pont (E.I.) de Nemours & Co. .................... 400 17,004 Praxair, Inc. ...................................... 5,400 298,350 Rohm & Haas Co. .................................... 2,000 69,260 ------------ 1,005,772 ------------ CHEMICALS (DIVERSIFIED)--0.3% PPG Industries, Inc. ............................... 5,100 263,772 ------------ CHEMICALS (SPECIALTY)--0.0% Monsanto Co. ....................................... 200 6,760 ------------ COMMUNICATIONS EQUIPMENT--1.4% American Tower Corp. Class A (b) ................... 5,600 53,032 CIENA Corp. (b) .................................... 3,800 54,378 Corning, Inc. ...................................... 5,100 45,492 JDS Uniphase Corp. (b) ............................. 21,100 183,148 Lucent Technologies, Inc. (b)(c) ................... 31,900 200,651 Motorola, Inc. ..................................... 34,800 522,696 QUALCOMM, Inc. (b) ................................. 7,500 378,750 Tellabs, Inc. (b) .................................. 1,300 19,448 ------------ 1,457,595 ------------ COMPUTERS (HARDWARE)--4.1% Brocade Communications Systems, Inc. (b) ........... 300 9,936 Compaq Computer Corp. .............................. 10,400 101,504 Dell Computer Corp. (b) ............................ 28,600 777,348 Hewlett-Packard Co. ................................ 19,200 394,368 International Business Machines Corp. (c) .......... 19,100 2,310,336 Juniper Networks, Inc. (b) ......................... 1,300 24,635 NCR Corp. (b) ...................................... 7,600 280,136 Sun Microsystems, Inc. (b) ......................... 36,900 453,870 ------------ 4,352,133 ------------ See Notes to Financial Statements 82 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES SHARES VALUE ------ ------------ COMPUTERS (NETWORKING)--1.5% Cisco Systems, Inc. (b)(c) ......................... 83,400 $ 1,510,374 Network Appliance, Inc. (b) ........................ 1,400 30,618 ------------ 1,540,992 ------------ COMPUTERS (PERIPHERALS)--0.2% EMC Corp. (b) ...................................... 14,700 197,568 ------------ COMPUTERS (SOFTWARE & SERVICES)--5.4% Adobe Systems, Inc. ................................ 1,800 55,890 Autodesk, Inc. ..................................... 200 7,454 BEA Systems, Inc. (b) .............................. 2,500 38,500 Citrix Systems, Inc. (b) ........................... 3,700 83,842 Computer Associates International, Inc. ............ 5,600 193,144 eBay, Inc. (b) ..................................... 1,300 86,970 Intuit, Inc. (b) ................................... 600 25,668 Microsoft Corp. (b)(c) ............................. 56,800 3,763,000 Oracle Corp. (b) ................................... 56,700 783,027 Parametric Technology Corp. (b) .................... 100 781 PeopleSoft, Inc. (b) ............................... 1,700 68,340 Peregrine Systems, Inc. (b) ........................ 2,000 29,660 Siebel Systems, Inc. (b) ........................... 9,200 257,416 VeriSign, Inc. (b) ................................. 1,600 60,864 VERITAS Software Corp. (b) ......................... 5,000 224,150 ------------ 5,678,706 ------------ CONSUMER FINANCE--1.5% AmeriCredit Corp. (b) .............................. 2,900 91,495 Capital One Financial Corp. ........................ 8,200 442,390 Countrywide Credit Industries, Inc. ................ 10,800 442,476 Household International, Inc. ...................... 5,600 324,464 MBNA Corp. ......................................... 9,200 323,840 ------------ 1,624,665 ------------ CONTAINERS & PACKAGING (PAPER)--0.1% Temple-Inland, Inc. ................................ 1,700 96,441 ------------ DISTRIBUTORS (FOOD & HEALTH)--0.6% Cardinal Health, Inc. .............................. 3,800 245,708 SYSCO Corp. ........................................ 12,700 332,994 ------------ 578,702 ------------ ELECTRIC COMPANIES--2.6% Ameren Corp. ....................................... 3,000 126,900 American Electric Power Co., Inc. .................. 1,700 74,001 Cinergy Corp. ...................................... 4,100 137,063 CMS Energy Corp. ................................... 4,600 110,538 Consolidated Edison, Inc. .......................... 800 32,288 Constellation Energy Group, Inc. ................... 900 23,895 Dominion Resources, Inc. ........................... 2,100 126,210 DTE Energy Co. ..................................... 4,900 205,506 Duke Energy Corp. .................................. 2,100 82,446 Edison International (b) ........................... 11,500 173,650 Entergy Corp. ...................................... 9,500 371,545 FirstEnergy Corp. .................................. 2,700 94,446 FPL Group, Inc. .................................... 3,000 169,200 PG&E Corp. (b) ..................................... 13,900 267,436 Pinnacle West Capital Corp. ........................ 2,500 104,625 Potomac Electric Power Co. ......................... 1,300 29,341 PPL Corp. .......................................... 1,300 45,305 Progress Energy, Inc. .............................. 6,300 283,689 Reliant Energy, Inc. ............................... 1,600 42,432 Teco Energy, Inc. .................................. 1,100 28,864 TXU Corp. .......................................... 200 9,430 Wisconsin Energy Corp. ............................. 3,200 72,192 Xcel Energy, Inc. .................................. 6,000 166,440 ------------ 2,777,442 ------------ SHARES VALUE ------ ------------ ELECTRICAL EQUIPMENT--4.1% Cooper Industries, Inc. ............................ 1,700 $ 59,364 Emerson Electric Co. ............................... 4,800 274,080 General Electric Co. (c) ........................... 98,400 3,943,872 Rockwell International Corp. ....................... 3,100 55,366 ------------ 4,332,682 ------------ ELECTRONICS (COMPONENT DISTRIBUTORS)--0.1% Grainger (W.W.), Inc. .............................. 2,800 134,400 ------------ ELECTRONICS (INSTRUMENTATION)--0.1% Agilent Technologies, Inc. (b) ..................... 3,100 88,381 ------------ ELECTRONICS (SEMICONDUCTORS)--3.8% Altera Corp. (b) ................................... 7,400 157,028 Analog Devices, Inc. (b) ........................... 4,400 195,316 Applied Micro Circuits Corp. (b) ................... 800 9,056 Broadcom Corp. Class A (b) ......................... 1,900 77,653 Cypress Semiconductor Corp. (b) .................... 200 3,986 Intel Corp. (c) .................................... 69,500 2,185,775 Lattice Semiconductor Corp. (b) .................... 1,900 39,083 Linear Technology Corp. ............................ 4,700 183,488 LSI Logic Corp. (b) ................................ 1,600 25,248 Maxim Integrated Products, Inc. (b) ................ 3,400 178,534 Micron Technology, Inc. (b) ........................ 4,400 136,400 PMC-Sierra, Inc. (b) ............................... 1,500 31,890 Texas Instruments, Inc. ............................ 17,000 476,000 Vitesse Semiconductor Corp. (b) .................... 700 8,701 Xilinx, Inc. (b) ................................... 6,600 257,730 ------------ 3,965,888 ------------ ENTERTAINMENT--2.3% AOL Time Warner, Inc. (b) .......................... 44,100 1,415,610 Viacom, Inc. Class B (b) ........................... 20,100 887,415 Walt Disney Co. (The) .............................. 4,200 87,024 ------------ 2,390,049 ------------ EQUIPMENT (SEMICONDUCTORS)--0.5% Applied Materials, Inc. (b) ........................ 11,100 445,110 Teradyne, Inc. (b) ................................. 1,100 33,154 ------------ 478,264 ------------ FINANCIAL (DIVERSIFIED)--5.3% Ambac Financial Group, Inc. ........................ 4,100 237,226 American Express Co. ............................... 5,400 192,726 Citigroup, Inc. (c) ................................ 60,700 3,064,136 Fannie Mae ......................................... 13,500 1,073,250 Freddie Mac ........................................ 8,700 568,980 Morgan Stanley Dean Witter & Co. ................... 7,900 441,926 ------------ 5,578,244 ------------ FOODS--0.6% Campbell Soup Co. .................................. 500 14,935 Heinz (H.J.) Co. ................................... 4,900 201,488 Hershey Foods Corp. ................................ 500 33,850 Kellogg Co. ........................................ 5,200 156,520 Kraft Foods, Inc. Class A .......................... 7,900 268,837 ------------ 675,630 ------------ FOOTWEAR--0.2% NIKE, Inc. Class B ................................. 4,300 241,832 ------------ HARDWARE & TOOLS--0.1% Black & Decker Corp. (The) ......................... 3,400 128,282 ------------ HEALTH CARE (DIVERSIFIED)--4.7% Abbott Laboratories ................................ 16,400 914,300 American Home Products Corp. ....................... 22,000 1,349,920 Bristol-Myers Squibb Co. ........................... 16,400 836,400 Johnson & Johnson .................................. 31,100 1,838,010 ------------ 4,938,630 ------------ See Notes to Financial Statements 83 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES SHARES VALUE ------ ------------ HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--5.3% Allergan, Inc. ..................................... 1,400 $ 105,070 Forest Laboratories, Inc. (b) ...................... 4,300 352,385 Lilly (Eli) & Co. .................................. 9,100 714,714 Merck & Co., Inc. .................................. 18,800 1,105,440 Pfizer, Inc. ....................................... 58,500 2,331,225 Pharmacia Corp. .................................... 8,600 366,790 Schering-Plough Corp. .............................. 17,700 633,837 ------------ 5,609,461 ------------ HEALTH CARE (HOSPITAL MANAGEMENT)--0.7% HCA, Inc. .......................................... 10,700 412,378 Tenet Healthcare Corp. (b) ......................... 5,400 317,088 ------------ 729,466 ------------ HEALTH CARE (MANAGED CARE)--0.5% CIGNA Corp. ........................................ 4,900 453,985 UnitedHealth Group, Inc. ........................... 100 7,077 WellPoint Health Networks, Inc. (b) ................ 900 105,165 ------------ 566,227 ------------ HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.7% Applied Biosystems Group - Applera Corp. ........... 2,500 98,175 Bard (C.R.), Inc. .................................. 800 51,600 Baxter International, Inc. ......................... 10,200 547,026 Becton, Dickinson and Co. .......................... 7,100 235,365 Boston Scientific Corp. (b) ........................ 3,200 77,184 Guidant Corp. (b) .................................. 4,200 209,160 Medtronic, Inc. (b) ................................ 7,800 399,438 St. Jude Medical, Inc. (b) ......................... 1,900 147,535 Zimmer Holdings, Inc. (b) .......................... 900 27,486 ------------ 1,792,969 ------------ HEALTH CARE (SPECIALIZED SERVICES)--0.0% Omnicare, Inc. ..................................... 1,300 32,344 ------------ HOUSEHOLD PRODUCTS (NON-DURABLE)--1.9% Colgate-Palmolive Co. .............................. 8,900 513,975 Kimberly-Clark Corp. ............................... 6,200 370,760 Procter & Gamble Co. (The) ......................... 14,400 1,139,472 ------------ 2,024,207 ------------ INSURANCE (LIFE/HEALTH)--1.4% AFLAC, Inc. ........................................ 11,500 282,440 Jefferson Pilot Corp. .............................. 3,300 152,691 Lincoln National Corp. ............................. 4,200 203,994 MetLife, Inc. ...................................... 13,000 411,840 Protective Life Corp. .............................. 900 26,037 Prudential Financial, Inc. (b) ..................... 3,900 129,441 Torchmark Corp. .................................... 3,500 137,655 UnumProvident Corp. ................................ 5,700 151,107 ------------ 1,495,205 ------------ INSURANCE (MULTI-LINE)--1.9% American International Group, Inc. ................. 23,500 1,865,900 Hartford Financial Services Group, Inc. (The) ...... 1,500 94,245 ------------ 1,960,145 ------------ INSURANCE (PROPERTY-CASUALTY)--0.6% Allstate Corp. (The) ............................... 11,600 390,920 Chubb Corp. (The) .................................. 200 13,800 Cincinnati Financial Corp. ......................... 100 3,815 MBIA, Inc. ......................................... 4,100 219,883 ------------ 628,418 ------------ INVESTMENT BANKING/BROKERAGE--1.1% E*TRADE Group, Inc. (b) ............................ 13,500 138,375 Edwards (A.G.), Inc. ............................... 1,000 44,170 Goldman Sachs Group, Inc. (The) .................... 3,900 361,725 Instinet Group, Inc. (b) ........................... 2,800 28,140 SHARES VALUE ------ ------------ INVESTMENT BANKING/BROKERAGE--CONTINUED Legg Mason, Inc. ................................... 200 $ 9,996 Merrill Lynch & Co., Inc. .......................... 3,400 177,208 Schwab (Charles) Corp. (The) ....................... 22,800 352,716 ------------ 1,112,330 ------------ INVESTMENT MANAGEMENT--0.2% Stilwell Financial, Inc. ........................... 5,900 160,598 T.Rowe Price Group, Inc. ........................... 2,300 79,879 ------------ 240,477 ------------ IRON & STEEL--0.0% Allegheny Technology, Inc. ......................... 1,400 23,450 ------------ LEISURE TIME (PRODUCTS)--0.4% Harley-Davidson, Inc. .............................. 2,500 135,775 Hasbro, Inc. ....................................... 4,900 79,527 Mattel, Inc. ....................................... 14,500 249,400 ------------ 464,702 ------------ LODGING - HOTELS--0.5% Carnival Corp. ..................................... 4,500 126,360 Marriott International, Inc. Class A ............... 6,000 243,900 Starwood Hotels & Resorts Worldwide, Inc. .......... 6,600 197,010 ------------ 567,270 ------------ MACHINERY (DIVERSIFIED)--0.4% Caterpillar, Inc. .................................. 4,400 229,900 Ingersoll-Rand Co. ................................. 4,000 167,240 ------------ 397,140 ------------ MANUFACTURING (DIVERSIFIED)--3.1% Danaher Corp. ...................................... 3,700 223,147 Eaton Corp. ........................................ 2,000 148,820 Honeywell International, Inc. ...................... 5,200 175,864 Illinois Tool Works, Inc. .......................... 1,800 121,896 ITT Industries, Inc. ............................... 3,300 166,650 Johnson Controls, Inc. ............................. 2,600 209,950 Parker-Hannifin Corp. .............................. 1,600 73,456 Tyco International Ltd. ............................ 28,300 1,666,870 United Technologies Corp. .......................... 6,700 433,021 ------------ 3,219,674 ------------ NATURAL GAS--0.8% Dynegy, Inc. Class A ............................... 7,700 196,350 El Paso Corp. ...................................... 11,900 530,859 NiSource, Inc. ..................................... 500 11,530 Williams Cos., Inc. (The) .......................... 3,800 96,976 ------------ 835,715 ------------ OIL--0.5% Conoco, Inc. ....................................... 11,800 333,940 Phillips Petroleum Co. ............................. 2,900 174,754 ------------ 508,694 ------------ OIL & GAS (DRILLING & EQUIPMENT)--0.7% Baker Hughes, Inc. ................................. 6,100 222,467 Cooper Cameron Corp. (b) ........................... 4,200 169,512 Diamond Offshore Drilling, Inc. .................... 4,400 133,760 Schlumberger Ltd. .................................. 700 38,465 Transocean Sedco Forex, Inc. ....................... 4,600 155,572 ------------ 719,776 ------------ OIL & GAS (EXPLORATION & PRODUCTION)--0.1% Anadarko Petroleum Corp. ........................... 1,700 96,645 ------------ OIL (INTERNATIONAL INTEGRATED)--3.9% ChevronTexaco Corp. ................................ 14,700 1,317,267 Exxon Mobil Corp. .................................. 72,000 2,829,600 ------------ 4,146,867 ------------ See Notes to Financial Statements 84 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES SHARES VALUE ------ ------------ PAPER & FOREST PRODUCTS--0.4% Georgia-Pacific Corp. .............................. 5,700 $ 157,377 Weyerhaeuser Co. ................................... 4,300 232,544 Willamette Industries, Inc. ........................ 400 20,848 ------------ 410,769 ------------ PERSONAL CARE--0.4% Gilliette Co. (The) ................................ 12,000 400,800 ------------ PHOTOGRAPHY/IMAGING--0.1% Eastman Kodak Co. .................................. 3,400 100,062 PUBLISHING--0.2% Gemstar-TV Guide International, Inc. (b) ........... 8,100 224,370 ------------ PUBLISHING (NEWSPAPERS)--0.4% Gannett Co., Inc. .................................. 6,300 423,549 New York Times Co. (The) Class A ................... 500 21,625 ------------ 445,174 ------------ RAILROADS--0.4% Burlington Northern Santa Fe Corp. ................. 9,800 279,594 CSX Corp. .......................................... 3,200 112,160 GATX Corp. ......................................... 500 16,260 Norfolk Southern Corp. ............................. 500 9,165 Union Pacific Corp. ................................ 800 45,600 ------------ 462,779 ------------ RESTAURANTS--0.4% McDonald's Corp. ................................... 17,500 463,225 ------------ RETAIL (BUILDING SUPPLIES)--1.6% Home Depot, Inc. (The) ............................. 28,000 1,428,280 Lowe's Cos., Inc. .................................. 6,400 297,024 ------------ 1,725,304 ------------ RETAIL (COMPUTERS & ELECTRONICS)--0.1% Best Buy Co., Inc. (b) ............................. 1,500 111,720 ------------ RETAIL (DEPARTMENT STORES)--0.6% Federated Department Stores, Inc. (b) .............. 3,500 143,150 Kohl's Corp. (b) ................................... 6,600 464,904 May Department Stores Co. (The) .................... 1,400 51,772 ------------ 659,826 ------------ RETAIL (DRUG STORES)--0.3% CVS Corp. .......................................... 3,500 103,600 Walgreen Co. ....................................... 7,700 259,182 ------------ 362,782 ------------ RETAIL (FOOD CHAINS)--0.7% Kroger Co. (The) (b) ............................... 9,200 192,004 Safeway, Inc. (b) .................................. 12,900 538,575 ------------ 730,579 ------------ RETAIL (GENERAL MERCHANDISE)--2.9% Costco Wholesale Corp. (b) ......................... 5,300 235,214 Target Corp. ....................................... 13,500 554,175 Wal-Mart Stores, Inc. (c) .......................... 40,200 2,313,510 ------------ 3,102,899 ------------ RETAIL (SPECIALTY)--0.2% Bed Bath & Beyond, Inc. (b) ........................ 7,000 237,300 ------------ RETAIL (SPECIALTY-APPAREL)--0.5% Abercrombie & Fitch Co. Class A (b) ............... 6,000 159,180 Limited, Inc. (The) ................................ 1,200 17,664 TJX Cos., Inc. (The) ............................... 9,900 394,614 ------------ 571,458 ------------ SHARES VALUE ------ ------------ SAVINGS & LOAN COMPANIES--1.1% Astoria Financial Corp. ............................ 900 $ 23,814 Charter One Financial, Inc. ........................ 3,800 103,170 Golden State Bancorp, Inc. ......................... 2,400 62,760 GreenPoint Financial Corp. ......................... 2,800 100,100 Indymac Bancorp, Inc. (b) .......................... 1,200 28,056 Washington Mutual, Inc. ............................ 24,500 801,150 ------------ 1,119,050 ------------ SERVICES (ADVERTISING/MARKETING)--0.3% Interpublic Group of Cos., Inc. (The) .............. 5,800 171,332 Omnicom Group, Inc. ................................ 1,700 151,895 ------------ 323,227 ------------ SERVICES (COMMERCIAL & CONSUMER)--0.4% Cendant Corp. (b) .................................. 18,800 368,668 Crown Castle International Corp. (b) ............... 1,000 10,680 ------------ 379,348 ------------ SERVICES (COMPUTER SYSTEMS)--0.4% Computer Sciences Corp. (b) ........................ 2,600 127,348 Electronic Data Systems Corp. ...................... 4,700 322,185 ------------ 449,533 ------------ SERVICES (DATA PROCESSING)--0.4% Automatic Data Processing, Inc. .................... 6,500 382,850 ------------ TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.8% AT&T Wireless Services, Inc. (b) ................... 28,800 413,856 Nextel Communications, Inc. Class A (b) ............ 8,300 90,968 Sprint Corp. (PCS Group) (b) ....................... 14,300 349,063 ------------ 853,887 ------------ TELECOMMUNICATIONS (LONG DISTANCE)--1.1% AT&T Corp. ......................................... 33,200 602,248 Sprint Corp. (FON Group) ........................... 3,700 74,296 WorldCom, Inc. - MCI Group ......................... 900 11,430 WorldCom, Inc. - WorldCom Group (b)(c) ............. 33,600 473,088 ------------ 1,161,062 ------------ TELEPHONE--3.5% ALLTEL Corp. ....................................... 1,400 86,422 BellSouth Corp. .................................... 16,000 610,400 Qwest Communications International, Inc. ........... 26,400 373,032 SBC Communications, Inc. ........................... 29,900 1,171,183 Verizon Communications, Inc. ....................... 30,400 1,442,784 ------------ 3,683,821 ------------ TEXTILES (APPAREL)--0.1% Jones Apparel Group, Inc. (b) ...................... 3,800 126,046 ------------ TOBACCO--1.5% Philip Morris Cos., Inc. ........................... 33,500 1,535,975 ------------ TRUCKS & PARTS--0.0% Paccar, Inc. ....................................... 400 26,248 ------------ WASTE MANAGEMENT--0.4% Waste Management, Inc. ............................. 13,700 437,167 ------------ TOTAL COMMON STOCKS (Identified cost $106,629,553) ............................. 102,041,760 ------------ FOREIGN COMMON STOCKS--1.9% ALUMINUM--0.2% Alcan Inc. (Canada) ................................ 6,700 240,731 ------------ COMMUNICATIONS EQUIPMENT--0.2% Nortel Networks Corp. (Canada) (b) ................. 29,700 222,750 ------------ See Notes to Financial Statements 85 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES SHARES VALUE ------ ------------ FOODS--0.5% Unilever NV NY Registered Shares (Netherlands) ..... 8,500 $ 489,685 ------------ GOLD & PRECIOUS METALS MINING--0.2% Barrick Gold Corp. (Canada) ........................ 9,700 154,715 ------------ OIL (INTERNATIONAL INTEGRATED)--0.8% Royal Dutch Petroleum Co. NY Registered Shares (Netherlands) ............................. 18,200 892,164 ------------ TOTAL FOREIGN COMMON STOCKS (Identified cost $2,186,755) ............................... 2,000,045 ------------ TOTAL LONG-TERM INVESTMENTS--98.7% (Identified cost $108,970,038) ............................. 104,195,690 ------------ STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ SHORT-TERM OBLIGATIONS--1.3% COMMERCIAL PAPER--1.3% Govco, Inc. 1.75%, 1/2/02 ............ A-1+ $1,345 1,344,934 ------------ TOTAL SHORT-TERM OBLIGATIONS (Identified cost $1,344,934) ............................... 1,344,934 ------------ TOTAL INVESTMENTS--100.0% (Identified cost $110,314,972) ............................. 105,540,624(a) Other assets and liabilities, net--0.0% .................... (47,184) ------------ NET ASSETS--100.0% ........................................... $105,493,440 ============ (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $10,852,547 and gross depreciation of $18,226,128 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $112,914,205. (b) Non-income producing. (c) All or portion segregated as collateral for futures contract. See Notes to Financial Statements 86 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $110,314,972) $105,540,624 Cash ........................................................ 2,426 Receivables Dividends and interest .................................... 117,041 Fund shares sold .......................................... 77,722 Prepaid expenses ............................................ 951 ------------ Total assets ............................................ 105,738,764 ------------ LIABILITIES Payables Fund shares repurchased ................................... 122,182 Variation margin for futures contracts .................... 13,028 Printing fee .............................................. 37,873 Investment advisory fee ................................... 28,715 Professional fee .......................................... 24,536 Financial agent fee ....................................... 9,825 Trustees' fee ............................................. 3,262 Accrued expenses ............................................ 5,903 ------------ Total liabilities ....................................... 245,324 ------------ NET ASSETS .................................................. $105,493,440 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest .......... $119,752,686 Undistributed net investment income ....................... 103,661 Accumulated net realized loss ............................. (9,591,359) Net unrealized depreciation ............................... (4,771,548) ------------ NET ASSETS .................................................. $105,493,440 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ................................... 9,755,462 ============ Net asset value and offering price per share ................ $10.81 ====== STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends ................................................. $ 1,387,143 Interest .................................................. 56,776 Foreign taxes withheld .................................... (7,102) ------------ Total investment income ................................. 1,436,817 ------------ EXPENSES Investment advisory fee ................................... 480,618 Financial agent fee ....................................... 122,768 Custodian ................................................. 51,966 Printing .................................................. 48,103 Professional .............................................. 26,809 Trustees .................................................. 8,437 Miscellaneous ............................................. 9,820 ------------ Total expenses .......................................... 748,521 Less expenses borne by investment adviser ............... (160,962) Custodian fees paid indirectly .......................... (113) ------------ Net expenses ............................................ 587,446 ------------ NET INVESTMENT INCOME ....................................... 849,371 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ........................... (8,533,979) Net realized loss on futures contracts .................... (336,995) Net change in unrealized appreciation (depreciation) on investments ............................ (6,133,720) ------------ NET LOSS ON INVESTMENTS ..................................... (15,004,694) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ........ $(14,155,323) ============ See Notes to Financial Statements 87 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ------------ ------------ FROM OPERATIONS Net investment income (loss) .............................. $ 849,371 $ 984,086 Net realized gain (loss) .................................. (8,870,974) 1,124,106 Net change in unrealized appreciation (depreciation) ...... (6,133,720) (17,141,954) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (14,155,323) (15,033,762) ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ..................................... (761,382) (979,081) Net realized short-term gains ............................. -- (629,791) Net realized long-term gains .............................. (676,397) (3,297,124) ------------ ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (1,437,779) (4,905,996) ------------ ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (3,167,536 and 3,346,055 shares, respectively) .................................. 35,461,521 46,232,904 Net asset value of shares issued from reinvestment of distributions (129,170 and 362,784 shares, respectively) ........................................... 1,437,779 4,905,996 Cost of shares repurchased (2,833,213 and 3,422,855 shares, respectively) ......................... (31,437,657) (47,434,243) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS . 5,461,643 3,704,657 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ..................... (10,131,459) (16,235,101) NET ASSETS Beginning of period ....................................... 115,624,899 131,860,000 ------------ ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $103,661 AND $15,672, RESPECTIVELY) .... $105,493,440 $115,624,899 ============ ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
FROM YEAR ENDED DECEMBER 31, INCEPTION ----------------------------------------- 7/15/97 TO 2001(5) 2000 1999 1998 12/31/97 ------ ------ ------ ------ ------ Net asset value, beginning of period ............................ $12.44 $14.64 $13.08 $10.49 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .................................. 0.09 0.11 0.12 0.12 0.05 Net realized and unrealized gain (loss) ....................... (1.57) (1.75) 2.33 3.19 0.54 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ............................ (1.48) (1.64) 2.45 3.31 0.59 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .......................... (0.08) (0.11) (0.12) (0.12) (0.05) Dividends from net realized gains ............................. (0.07) (0.45) (0.77) (0.60) (0.05) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS ......................................... (0.15) (0.56) (0.89) (0.72) (0.10) ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ....................................... (1.63) (2.20) 1.56 2.59 0.49 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD .................................. $10.81 $12.44 $14.64 $13.08 $10.49 ====== ====== ====== ====== ====== Total return .................................................... (11.90)% (11.47)% 18.86% 31.68% 5.83%(3) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ........................... $105,493 $115,625 $131,860 $69,522 $30,851 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (2) ........................................ 0.55%(4) 0.55% 0.55% 0.55% 0.55%(1) Net investment income ......................................... 0.80% 0.80% 0.95% 1.08% 1.46%(1) Portfolio turnover rate ......................................... 40% 63% 45% 45% 9%(3) (1) Annualized. (2) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.70%, 0.69%, 0.75%, 0.82% and 1.05% for the periods ended December 31, 2001, 2000, 1999, 1998 and 1997, respectively. (3) Not annualized. (4) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (5) As required, effective January 1, 2001, the Fund has adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. There was no effect to net investment income per share and net realized and unrealized gain (loss) per share and the ratio of net investment income to average net assets. Per share ratios and supplemental data from prior periods have not been restated to reflect this change.
See Notes to Financial Statements 88 PHOENIX-JANUS CORE EQUITY SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking long-term growth of capital. INVESTMENT ADVISER'S REPORT Amid optimism for an economic recovery in 2002, the major stock indices rallied through the final months of 2001 and erased the losses posted immediately following the September 11th terrorist attacks. Helping embolden the markets was the Federal Reserve, which cut interest rates 11 times during the year to trim the key overnight lending rate to 1.75%, a 40-year low. In this turbulent environment, the Portfolio fell 11.63%, but still beat its benchmark, the S&P 500 Index(1) which fell 11.87%. Minnesota Mining & Manufacturing (3M) supported our results. The company is benefiting from new management direction from General Electric veteran Jim McNerney, who took the helm on January 1, 2001, and immediately turned his attention to improving the company's working capital structure, shoring up cash flow and increasing the effectiveness of management. Another steady performer was the world's largest brewer, Anheuser-Busch, which managed to introduce price increases even as the economy slowed and pricing power became scarce. On the downside, financial services giant Citigroup worked against us. The recession hurt its corporate finance business, and the World Trade Center disaster generated a $500 million loss for its insurance unit. Consequently, the stock experienced some selling pressure. Exxon Mobil also disappointed as it fell in lockstep with oil prices. OUTLOOK Looking ahead, I believe many issues need to be resolved before the economy regains the solid footing necessary for a recovery. That being the case, we will continue to focus on quality companies at attractive prices, confident that those with the strongest fundamentals will prevail. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Core Equity Series S&P 500 Index(1) 12/15/99 $10,000.00 $10,000.00 12/31/99 10,585.90 10,400.00 12/29/00 9,936.82 9,444.51 12/31/01 8,780.90 8,322.99 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 12/15/99 TO 1 YEAR 12/31/01 - ------------------------------------------------------------------------------ Core Equity Series (11.63)% (6.15)% - ------------------------------------------------------------------------------ S&P 500 Index(1) (11.87)% (8.58)% - ------------------------------------------------------------------------------ This chart assumes an initial gross investment of $10,000 made on 12/15/99 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. (1) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance. The index is not available for direct investment. 89 PHOENIX-JANUS CORE EQUITY SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE -------- ----------- COMMON STOCKS--85.1% AIR FREIGHT--1.6% FedEx Corp. (b) .................................... 6,420 $ 333,070 ----------- AUTO PARTS & EQUIPMENT--1.5% Delphi Automotive Systems .......................... 22,675 309,740 ----------- AUTOMOBILES--1.0% General Motors Corp. ............................... 4,315 209,709 ----------- BANKS (MAJOR REGIONAL)--2.0% Bank of New York Co., Inc. (The) ................... 3,975 162,180 U.S. Bancorp ....................................... 11,803 247,037 ----------- 409,217 ----------- BANKS (MONEY CENTER)--0.9% Bank of America Corp. .............................. 3,100 195,145 ----------- BEVERAGES (ALCOHOLIC)--2.1% Anheuser-Busch Cos., Inc. .......................... 9,630 435,372 ----------- BEVERAGES (NON-ALCOHOLIC)--1.2% PepsiCo, Inc. ...................................... 5,082 247,442 ----------- BROADCASTING (TELEVISION, RADIO & CABLE)--2.5% Clear Channel Communications, Inc. (b) ............. 3,895 198,294 Comcast Corp. Class A (b) .......................... 3,300 118,800 Entravision Communications Corp. (b) ............... 6,365 76,062 Spanish Broadcasting Systems, Inc. (b) ............. 12,700 125,603 ----------- 518,759 ----------- CHEMICALS--1.5% Du Pont (E.I.) de Nemours & Co. .................... 4,400 187,044 Lyondell Chemical Co. .............................. 8,720 124,958 ----------- 312,002 ----------- CHEMICALS (SPECIALTY)--1.8% Monsanto Co. ....................................... 10,990 371,462 ----------- COMMUNICATIONS EQUIPMENT--0.6% CIENA Corp. ........................................ 8,060 115,339 ----------- COMPUTERS (HARDWARE)--2.4% Apple Computer, Inc. (b) ........................... 16,085 352,261 International Business Machines Corp. .............. 1,300 157,248 ----------- 509,509 ----------- COMPUTERS (PERIPHERALS)--1.2% Lexmark International, Inc. (b) .................... 4,330 255,470 ----------- COMPUTERS (SOFTWARE & SERVICES)--4.6% Cadence Design Systems, Inc. (b) ................... 11,040 241,997 Microsoft Corp. (b) ................................ 5,095 337,544 Oracle Corp. (b) ................................... 8,085 111,654 Perot Systems Corp. Class A ........................ 12,730 259,946 ----------- 951,141 ----------- ELECTRICAL EQUIPMENT--2.8% General Electric Co. ............................... 14,695 588,976 ----------- ELECTRONICS (SEMICONDUCTORS)--2.1% Linear Technology Corp. ............................ 4,520 176,461 Maxim Integrated Products, Inc. (b) ................ 5,035 264,388 ----------- 440,849 ----------- ENGINEERING & CONSTRUCTION--1.3% Fluor Corp ......................................... 7,155 267,597 ----------- ENTERTAINMENT--4.0% Viacom, Inc. Class B (b) ........................... 12,240 540,396 Walt Disney Co. (The) .............................. 14,355 297,436 ----------- 837,832 ----------- SHARES VALUE -------- ----------- FINANCIAL (DIVERSIFIED)--7.7% American Express Co. ............................... 6,400 $ 228,416 Citigroup, Inc. .................................... 21,209 1,070,630 J.P. Morgan Chase & Co. ............................ 8,540 310,429 ----------- 1,609,475 ----------- HEALTH CARE (DIVERSIFIED)--2.1% American Home Products Corp. ....................... 7,250 444,860 ----------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--2.5% Lilly (Eli) & Co. .................................. 2,565 201,455 Pfizer, Inc. ....................................... 7,810 311,229 ----------- 512,684 ----------- HEALTH CARE (HOSPITAL MANAGEMENT)--2.2% Tenet Healthcare Corp. (b) ......................... 7,805 458,310 ----------- HEALTH CARE (MANAGED CARE)--1.1% CIGNA Corp. ........................................ 2,535 234,868 ----------- HOUSEHOLD PRODUCTS (NON-DURABLE)--2.8% Kimberly-Clark Corp. ............................... 4,175 249,665 Procter & Gamble Co. (The) ......................... 4,125 326,411 ----------- 576,076 ----------- INSURANCE (MULTI-LINE)--2.5% American International Group, Inc. ................. 6,661 528,883 ----------- INSURANCE (PROPERTY-CASUALTY)--1.8% Berkshire Hathaway, Inc. - Class B (b) ............. 150 378,750 ----------- INSURANCE BROKERS--3.8% Aon Corp. .......................................... 6,860 243,667 Marsh & McLennan Cos., Inc. ........................ 5,135 551,756 ----------- 795,423 ----------- LEISURE TIME (PRODUCTS)--1.5% Harley-Davidson, Inc. .............................. 1,965 106,719 Mattel, Inc. ....................................... 12,055 207,346 ----------- 314,065 ----------- LODGING - HOTELS--1.1% Starwood Hotels & Resorts Worldwide, Inc. .......... 7,725 230,591 ----------- MANUFACTURING (DIVERSIFIED)--6.7% Honeywell International, Inc. ...................... 13,960 472,127 Illinois Tool Works, Inc. .......................... 2,970 201,129 Minnesota Mining and Manufacturing Co. ............. 6,110 722,263 ----------- 1,395,519 ----------- OIL & GAS (EXPLORATION & PRODUCTION)--1.9% Anadarko Petroleum Corp. ........................... 1,720 97,782 Burlington Resources, Inc. ......................... 7,755 291,123 ----------- 388,905 ----------- OIL (INTERNATIONAL INTEGRATED)--1.7% Exxon Mobil Corp. .................................. 9,240 363,132 ----------- PUBLISHING (NEWSPAPERS)--1.1% Gannett Co., Inc. .................................. 3,300 221,859 ----------- RETAIL (GENERAL MERCHANDISE)--1.7% Target Corp. ....................................... 3,835 157,427 Wal-Mart Stores, Inc. .............................. 3,530 203,151 ----------- 360,578 ----------- SERVICES (ADVERTISING/MARKETING)--1.2% Lamar Advertising Co. .............................. 5,735 242,820 ----------- See Notes to Financial Statements 90 PHOENIX-JANUS CORE EQUITY SERIES SHARES VALUE -------- ----------- SERVICES (COMPUTER SYSTEMS)--1.6% Electronic Data Systems Corp. ...................... 4,760 $ 326,298 ----------- SERVICES (DATA PROCESSING)--2.5% Automatic Data Processing, Inc. .................... 8,655 509,779 ----------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)--2.5% AT&T Wireless Services, Inc. (b) ................... 35,872 515,481 ----------- TOTAL COMMON STOCKS (Identified cost $17,195,518) .............................. 17,716,987 ----------- FOREIGN COMMON STOCKS--4.7% AUTOMOBILES--1.2% Bayerische Motoren Werke AG (Germany) .............. 7,196 253,403 ----------- BEVERAGES (ALCOHOLIC)--0.8% Diageo plc (United Kingdom) ........................ 13,919 159,024 ----------- INSURANCE (PROPERTY-CASUALTY)--2.6% ACE Ltd. (Bermuda) ................................. 5,970 239,695 XL Capital Ltd. Class A (Bermuda) .................. 3,375 308,340 ----------- 548,035 ----------- LODGING - HOTELS--0.1% Fairmont Hotels & Resorts, Inc. (Canada) ........... 1,143 27,318 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $837,892) ................................. 987,780 ----------- FOREIGN PREFERRED STOCKS--1.0% AUTOMOBILES--1.0% PORSCHE AG Pfd. (Germany) .......................... 520 197,653 ----------- TOTAL FOREIGN PREFERRED STOCKS (Identified cost $152,352) ................................. 197,653 ----------- CONVERTIBLE PREFERRED STOCKS--1.1% ELECTRIC COMPANIES--0.7% Reliant Energy, Inc. Cv. Pfd. 2% ................... 2,610 133,084 ----------- PUBLISHING (NEWSPAPERS)--0.4% Tribune Co. Cv. Pfd. 2% ............................ 980 85,083 ----------- TOTAL CONVERTIBLE PREFERRED STOCKS (Identified cost $314,326) ................................. 218,167 ----------- STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ---------- ----- ----------- AGENCY NON MORTGAGE-BACKED SECURITIES--0.7% Fannie Mae 4.75%, 11/14/03 ................. AAA $ 65 $ 66,932 Fannie Mae 6.625%, 9/15/09 ................. AAA 80 85,455 ----------- TOTAL AGENCY NON MORTGAGE-BACKED SECURITIES (Identified cost $147,820) ................................. 152,387 ----------- CORPORATE BONDS--0.4% BEVERAGES (ALCOHOLIC)--0.1% Anheuser Busch Cos., Inc. 6%, 4/15/11 ...... A+ 15 15,169 CHEMICALS--0.3% Lyondell Chemical Cos. 9.625%, 5/1/07 ...... BB 66 66,825 ----------- TOTAL CORPORATE BONDS (Identified cost $81,928) .................................. 81,994 ----------- CONVERTIBLE BONDS--0.5% BROADCASTING (TELEVISION, RADIO & CABLE)--0.5% Clear Channel Communication, Inc. Cv 2.625%, 4/1/03 ........................... BBB- 98 99,960 ----------- TOTAL CONVERTIBLE BONDS (Identified cost $107,154) ................................. 99,960 ----------- TOTAL LONG-TERM INVESTMENTS--93.5% (Identified cost $18,836,990) .............................. 19,454,928 ----------- SHORT-TERM OBLIGATIONS--6.2% COMMERCIAL PAPER--4.3% Tyco Capital Corp. 1.78%, 1/2/02 ........... A-1 900 899,956 ----------- FEDERAL AGENCY SECURITIES--1.9% Freddie Mac 1.51%, 1/2/02 .................. AAA 400 399,983 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $1,299,939) ............................... 1,299,939 ----------- TOTAL INVESTMENTS--99.7% (Identified cost $20,136,929) .............................. 20,754,867(a) Other assets and liabilities, net--0.3% .................... 54,078 ----------- NET ASSETS--100.0% ............................................ $20,808,945 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $1,583,575 and gross depreciation of $1,028,723 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $20,200,015. (b) Non-income producing. See Notes to Financial Statements 91 PHOENIX-JANUS CORE EQUITY SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $20,136,929) $20,754,867 Cash ....................................................... 65,222 Receivables Investment securities sold ............................... 34,227 Interest and dividends ................................... 24,941 Fund shares sold ......................................... 8,845 Prepaid expenses ........................................... 160 ----------- Total assets ........................................... 20,888,262 ----------- LIABILITIES Payables Fund shares repurchased .................................. 9,313 Professional fee ......................................... 27,499 Printing fee ............................................. 25,901 Investment advisory fee .................................. 5,286 Financial agent fee ...................................... 4,423 Trustees' fee ............................................ 3,262 Accrued expenses ........................................... 3,633 ----------- Total liabilities ...................................... 79,317 ----------- NET ASSETS ................................................. $20,808,945 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ......... $24,028,103 Accumulated net realized loss ............................ (3,837,070) Net unrealized appreciation .............................. 617,912 ----------- NET ASSETS ................................................. $20,808,945 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization .................................. 2,399,164 =========== Net asset value and offering price per share ............... $8.67 ===== STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends ................................................ $ 218,473 Interest ................................................. 106,988 Foreign taxes withheld ................................... (1,382) ----------- Total investment income ................................ 324,079 ----------- EXPENSES Investment advisory fee .................................. 159,545 Financial agent fee ...................................... 50,167 Professional ............................................. 29,482 Printing ................................................. 29,116 Custodian ................................................ 20,161 Trustees ................................................. 8,430 Miscellaneous ............................................ 7,620 ----------- Total expenses ......................................... 304,521 Less expenses borne by investment adviser .............. (116,357) Custodian fees paid indirectly ......................... (466) ----------- Net expenses ........................................... 187,698 ----------- NET INVESTMENT INCOME ...................................... 136,381 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .......................... (3,016,503) Net realized loss on foreign currency .................... (408) Net change in unrealized appreciation (depreciation) on investments ......................................... 722,346 ----------- NET LOSS ON INVESTMENTS .................................... (2,294,565) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ....... $(2,158,184) =========== See Notes to Financial Statements 92 PHOENIX-JANUS CORE EQUITY SERIES STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ----------- ----------- FROM OPERATIONS Net investment income (loss) ............................................... $ 136,381 $ 79,592 Net realized gain (loss) ................................................... (3,016,911) (823,899) Net change in unrealized appreciation (depreciation) ....................... 722,346 (234,850) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................ (2,158,184) (979,157) ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ...................................................... (144,397) (78,810) Net realized short-term gains .............................................. -- (1,392) ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS .................... (144,397) (80,202) ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (1,689,380 and 1,461,504 shares, respectively) 15,217,081 15,406,145 Net asset value of shares issued from reinvestment of distributions (16,625 and 8,000 shares, respectively) .................................. 144,397 80,202 Cost of shares repurchased (807,498 and 186,518 shares, respectively) ...... (7,077,525) (1,903,529) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS .................. 8,283,953 13,582,818 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS ...................................... 5,981,372 12,523,459 NET ASSETS Beginning of period ........................................................ 14,827,573 2,304,114 ----------- ----------- END OF PERIOD (INCLUDING DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME OF $0 AND ($751), RESPECTIVELY) ........................ $20,808,945 $14,827,573 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
YEAR ENDED DECEMBER 31, FROM INCEPTION ------------------------- 12/15/99 TO 2001(7) 2000 12/31/99 ------ ------ -------------- Net asset value, beginning of period .... $ 9.88 $10.59 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .......... 0.07(6) 0.06 0.01 Net realized and unrealized gain (loss) (1.22) (0.71) 0.58 ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .... (1.15) (0.65) 0.59 ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .. (0.06) (0.06) -- Dividends from net realized gains ..... -- --(4) -- ------ ------ ------ TOTAL DISTRIBUTIONS ................. (0.06) (0.06) -- ------ ------ ------ CHANGE IN NET ASSET VALUE ............... (1.21) (0.71) 0.59 ------ ------ ------ NET ASSET VALUE, END OF PERIOD .......... $ 8.67 $ 9.88 $10.59 ====== ====== ====== Total return ............................ (11.63)% (6.13)% 5.86%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ... $20,809 $14,828 $2,304 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ................ 1.00%(5) 1.00% 1.00%(1) Net investment income ................. 0.73% 0.82% 1.89%(1) Portfolio turnover rate ................. 99% 107% 11%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.62%, 2.54% and 18.81% for the periods ended December 31, 2001, 2000 and 1999, respectively. (4) Amount is less than $0.01. (5) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (6) Computed using average shares outstanding. (7) As required, effective January 1, 2001, the Fund has adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began amortizing premiums on debt securities. The effect of this change for the year ended December 31, 2001 was to decrease the ratio of net investment income to average net assets from 0.78% to 0.73%. There was no effect to net investment income per share and net realized and unrealized gain (loss) per share. Per share ratios and supplemental data for prior periods have not been restated to reflect this change.
See Notes to Financial Statements 93 PHOENIX-JANUS FLEXIBLE INCOME SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking maximum total return, consistent with preservation of capital. INVESTMENT ADVISER'S REPORT For the year ending December 31, 2001, the Portfolio offered a return of 7.24% and lagged its benchmark, the Lehman Brothers Government/Credit Bond Index(1), which returned 8.50%. Within the bond market, a divergent pattern evolved. On the short end, rates fell, following the lead of the Federal Reserve's 11 rate cuts. Meanwhile, rates on longer-term notes and bonds eased upward, reflecting the market's expectations for an economic rebound in 2002. The long end of the market also experienced some localized volatility due to the early November announcement that the U.S. Treasury would no longer issue 30-year bonds. High-yield positions account for about 10% of the Portfolio, and we limit our focus to better quality offerings within the riskier high-yield landscape. One contributor here was the nation's number 2 trash transporter Allied Waste Industries, which reiterated a corporate-wide focus on boosting free cash flow and shrinking its debt load. Diminishing the Portfolio's performance were positions in Treasuries and longer-term debt issued by Fannie Mae, as long-term interest rates perked up to reflect an expected recovery. Prices on these holdings, which we consider core positions, eased accordingly. OUTLOOK Our focus remains on corporations equipped to ride out the current uncertain economy. We're also seeking out better-quality debt with higher yields. I'm optimistic that the economy should see some positive influence from the cheap short-term lending rates and the fiscal stimulus plan. However, I don't feel the magnitude of the recovery is going to be so great as to cause inflation to jump and hurt the fixed-income markets. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Lehman Brothers Government/ Lehman Brothers Flexible Income Series Credit Bond Index(1) Aggregate Bond Index(2) 12/15/99 $10,000.00 $10,000.00 $10,000.00 12/31/99 10,002.40 9,941.50 9,952.50 12/29/00 10,645.20 11,119.50 11,109.60 12/31/01 11,415.70 12,064.90 12,047.60
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 12/15/99 TO 1 YEAR 12/31/01 - -------------------------------------------------------------------------------- Flexible Income Series 7.24% 6.68% - -------------------------------------------------------------------------------- Lehman Brothers Government/Credit Bond Index(1) 8.50% 9.61% - -------------------------------------------------------------------------------- Lehman Brothers Aggregate Bond Index(2) 8.44% 9.53% - -------------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 12/15/99 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. (1) The Lehman Brothers Government/Credit Bond Index is an unmanaged, commonly used measure of bond performance. (2) The Lehman Brothers Aggregate Bond Index is an unmanaged, commonly used measure of bond performance and is provided for general comparative purposes. The indices are not available for direct investment. 94 PHOENIX-JANUS FLEXIBLE INCOME SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ------ ----------- U.S. GOVERNMENT SECURITIES--7.8% U.S. TREASURY BONDS--4.3% U.S. Treasury Bonds 6.25%, 5/15/30 ......... AAA $ 810 $ 877,426 U.S. Treasury Bonds 5.375%, 2/15/31 ........ AAA 265 261,274 ----------- 1,138,700 ----------- U.S. TREASURY NOTES--3.5% U.S. Treasury Notes 3.50%, 11/15/06 ........ AAA 290 279,555 U.S. Treasury Notes 5%, 8/15/11 ............ AAA 660 658,350 ----------- 937,905 ----------- TOTAL U.S. GOVERNMENT SECURITIES (Identified cost $2,136,849) ............................... 2,076,605 ----------- AGENCY NON MORTGAGE-BACKED SECURITIES--27.9% Fannie Mae 4.75%, 1/2/07 ................... AAA 295 293,023 Fannie Mae 5%, 1/15/07 ..................... Aaa(f) 3,115 3,128,021 Fannie Mae 6.25%, 2/1/11 ................... AA- 1,000 1,017,136 Fannie Mae 6%, 5/15/11 ..................... AAA 2,160 2,194,804 Fannie Mae 6.625%, 11/15/30 ................ AAA 800 836,959 ----------- TOTAL AGENCY NON MORTGAGE-BACKED SECURITIES (Identified cost $7,489,485) ............................... 7,469,943 ----------- CORPORATE BONDS--57.6% BEVERAGES (NON-ALCOHOLIC)--0.8% Coca Cola Enterprises, Inc. 6.125%, 8/15/11 A 225 226,415 ----------- BROADCASTING (TELEVISION, RADIO & CABLE)--4.7% Adelphia Communications 8.125%, 7/15/03 .... NA(f) 295 294,262 CSC Holdings, Inc. 7.625%, 4/1/11 .......... BB+ 300 300,906 Echostar DBS Corp. 144A 9.125%, 1/15/09 (b) B+ 335 337,513 Fox Sports Networks LLC 8.875%, 8/15/07 .... BBB- 250 258,750 Mediacom Broadband LLC 11%, 7/15/13 ........ B+ 55 60,638 ----------- 1,252,069 ----------- COMPUTERS (HARDWARE)--0.9% International Business Machines Corp. ...... 4.875%, 10/1/06 .......................... A+ 250 248,075 ----------- CONSUMER FINANCE--1.0% Ford Motor Credit Corp. 5.75%, 2/23/04 ..... BBB+ 250 254,086 ----------- ELECTRIC COMPANIES--3.7% Carolina Power and Light Co. 6.65%, 4/1/08 . BBB+ 150 153,858 Cinergy Corp. 6.25%, 9/1/04 ................ BBB+ 180 181,108 FirstEnergy Corp. 6.45%, 11/15/11 .......... BBB- 240 234,159 PSEG Power LLC 6.875%, 4/15/06 ............. BBB 250 256,020 PSEG Power LLC 7.75%, 4/15/11 .............. BBB 150 157,195 ----------- 982,340 ----------- ELECTRONICS (DEFENSE)--1.7% Raytheon Co. 6.50%, 7/15/05 ................ BBB 200 206,564 Raytheon Co. 6.15%, 11/1/08 ................ BBB- 250 248,332 ----------- 454,896 ----------- ENTERTAINMENT--1.9% AOL Time Warner, Inc. 6.125%, 4/15/06 ...... BBB+ 200 204,286 Viacom, Inc. 6.40%, 1/30/06 ................ A- 300 309,527 ----------- 513,813 ----------- FINANCIAL (DIVERSIFIED)--2.3% Citigroup, Inc. 7.25%, 10/1/10 ............. A+ 50 53,584 Golden State Bancorp, Inc. 7%, 8/1/03 ...... BB+ 400 403,580 Golden State Bancorp, Inc. 7.125%, 8/1/05 .. BB+ 165 165,642 ----------- 622,806 ----------- STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ------ ----------- FOODS--3.8% Conagra Foods, Inc. 6.75%, 9/15/11 ......... BBB+ $ 175 $ 178,789 Hormel Foods Corp. 144A 6.625%, 6/1/11 (b) . A 150 150,998 Kellogg Co. Series B 5.50%, 4/1/03 ......... BBB 250 256,133 Kellogg Co. Series B 6%, 4/1/06 ............ BBB 225 230,401 Kellogg Co. Series B 6.60%, 4/1/11 ......... BBB 200 205,550 ----------- 1,021,871 ----------- GAMING, LOTTERY & PARI-MUTUEL COMPANIES--0.5% Hard Rock Hotel, Inc. Series B 9.25%, 4/1/05 B- 150 144,750 ----------- HEALTH CARE (HOSPITAL MANAGEMENT)--3.6% HCA, Inc. 6.91%, 6/15/05 ................... BB+ 305 314,004 HCA, Inc. 7.875%, 2/1/11 ................... BB+ 75 76,875 Tenet Healthcare Corp. 6.375%, 12/1/11 ..... BBB 195 188,593 Tenet Healthcare Corp. 144A 5.375%, 11/15/06 (b) ............................. BBB 400 391,245 ----------- 970,717 ----------- HEALTH CARE (MANAGED CARE)--2.3% UnitedHealth Group, Inc. 7.50%, 11/15/05 ... A 140 149,000 Wellpoint Health Network 6.375%, 6/15/06 ... A- 455 464,006 ----------- 613,006 ----------- HEALTH CARE (SPECIALIZED SERVICES)--3.9% HEALTHSOUTH Corp. 8.50%, 2/1/08 ............ BBB- 225 235,125 HEALTHSOUTH Corp. 144A 7.375%, 10/1/06 (b) .............................. BBB- 300 301,500 Quest Diagnostic Inc. 7.50%, 7/12/11 ....... BBB- 250 257,855 Quest Diagnostic, Inc. 6.75%, 7/12/06 ...... BBB- 250 256,727 ----------- 1,051,207 ----------- HOMEBUILDING--0.3% KB Home 8.625%, 12/15/08 ................... BB- 75 75,750 ----------- HOUSEHOLD PRODUCTS (NON-DURABLE)--1.6% Dial Corp. (The) 7%, 8/15/06 ............... BBB- 280 281,734 Dial Corp. (The) 6.50%, 9/15/08 ............ BBB- 150 143,833 ----------- 425,567 ----------- LEISURE TIME (PRODUCTS)--0.4% Bally Total Fitness Holding Corp. Series D 9.875%, 10/15/07 ......................... B- 100 102,500 ----------- LODGING - HOTELS--0.3% Host Marriott LP144A 9.50%, 1/15/07 (b) .... BB 90 90,562 ----------- MEDICAL PRODUCTS & SUPPLIES--0.2% Vicar Operating, Inc.144A 9.875%, 12/1/09 (b) B- 60 61,500 OIL--2.1% Conoco Funding Co. 5.45%, 10/15/06 ......... BBB+ 270 276,291 Conoco Funding Co. 6.35%, 10/15/11 ......... BBB+ 155 156,358 Occidental Petroleum Corp. 6.75%, 1/15/12 .. BBB 130 129,547 ----------- 562,196 ----------- OIL & GAS (DRILLING & EQUIPMENT)--0.6% Kinder Morgan Energy Partners LP 6.75%, 3/15/11 .................................. A- 100 99,989 Kinder Morgan Energy Partners LP 7.40%, 3/15/31 .................................. A- 50 50,167 ----------- 150,156 ----------- OIL & GAS (EXPLORATION & PRODUCTION)--0.3% Louis Dreyfus Natural Gas 6.875%, 12/1/07 .. BBB+ 70 72,491 ----------- POWER PRODUCERS (INDEPENDENT)--0.6% Calpone Corp. 8.50%, 2/15/11 ............... BB+ 175 159,487 ----------- See Notes to Financial Statements 95 PHOENIX-JANUS FLEXIBLE INCOME SERIES STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ------ ----------- RETAIL (FOOD CHAINS)--6.7% Delhaize America, Inc. 8.125%, 4/15/11 ..... BBB- $ 250 $ 274,401 Delhaize America, Inc. 144A 7.375%, 4/15/06 (b) .............................. BBB- 160 169,623 Kroger Co. 7.15%, 3/1/03 ................... BBB- 70 73,064 Kroger Co. 7.375%, 3/1/05 .................. BBB- 155 163,673 Kroger Co. 7.45%, 3/1/08 ................... BBB- 425 456,453 Kroger Co. 7.50%, 4/1/31 ................... BBB- 185 194,187 Safeway, Inc. 3.625%, 11/5/03 .............. BBB 90 89,495 Safeway, Inc. 6.15%, 3/1/06 ................ BBB 205 210,466 Safeway, Inc. 6.50%, 3/1/11 ................ BBB 150 152,946 ----------- 1,784,308 ----------- RETAIL (GENERAL MERCHANDISE)--1.0% Wal-Mart Stores, Inc. 6.875%, 8/10/09 ...... AA 250 270,572 ----------- SERVICES (COMMERCIAL & CONSUMER)--1.7% Cendant Corp. 144A 6.875%, 8/15/06 (b) ..... BBB 200 193,187 PHH Corp. Series MTN 8.125%, 2/3/03 ........ A- 250 249,937 ----------- 443,124 ----------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)--3.0% Cingular Wireless 6.50%, 12/15/11 .......... A+ 90 91,184 Cingular Wireless 144A 7.125%, 12/15/31 (b) A+ 65 66,171 Verizon Global Funding Corp. Series BR 5.75%, 4/1/03 ............................ A+ 450 457,290 Verizon Wireless 144A 5.375%, 12/15/06 (b) . A+ 200 199,084 ----------- 813,729 ----------- TELECOMMUNICATIONS (LONG DISTANCE)--1.5% Qwest Capital Funding 144A 6.25%, 7/15/05 (b) .............................. BBB+ 250 247,890 Sprint Capital Corp. 144A 6%, 1/15/07 (b) .. BBB+ 165 163,826 ----------- 411,716 ----------- TELEPHONE--1.0% Qwest Capital Funding Cons Nts 5.875% 8/3/04 5.875%, 8/3/04 .................... BBB+ 280 277,171 ----------- WASTE MANAGEMENT--5.2% Allied Waste North America, Inc. Series B 7.625%, 1/1/06 ........................... BB- 200 198,500 Republic Service, Inc. 6.75%, 8/15/11 ...... BBB 200 200,268 Waste Management, Inc. 7%, 10/1/04 ......... BBB 500 518,514 Waste Management, Inc. 7.38%, 8/1/10 ....... BBB 455 465,978 ----------- 1,383,260 ----------- TOTAL CORPORATE BONDS (Identified cost $15,220,937) .............................. 15,440,140 ----------- STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ------ ----------- FOREIGN GOVERNMENT SECURITIES--0.2% MEXICO--0.2% United Mexican States Global Bond 8.375%, 1/14/11 .................................. BB+ $ 60 $ 62,250 ----------- TOTAL FOREIGN GOVERNMENT SECURITIES (Identified cost $61,746) .................................. 62,250 ----------- FOREIGN CORPORATE BONDS--0.7% FRANCE--0.7% France Telecom 144A 7.75%, 3/1/11 (b) ...... A- 170 182,088 ----------- TOTAL FOREIGN CORPORATE BONDS (Identified cost $179,157) ................................. 182,088 ----------- CONVERTIBLE BONDS--0.0% COMPUTERS (NETWORKING)--0.0% Candescent Technologies Cv. 144A 8%, 5/1/03 (b)(c)(d)(e) ...................... NA 50 4,250 ----------- TOTAL CONVERTIBLE BONDS (Identified cost $42,439) .................................. 4,250 ----------- TOTAL LONG-TERM INVESTMENTS--94.2% (Identified cost $25,130,614) .............................. 25,235,276 ----------- SHORT-TERM OBLIGATIONS--4.9% COMMERCIAL PAPER--4.9% Tyco International Ltd. 1.78%, 1/2/02 ...... A-1 1,300 1,299,936 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $1,299,936) ............................... 1,299,936 ----------- TOTAL INVESTMENTS--99.1% (Identified cost $26,430,550) .............................. 26,535,212(a) Other assets and liabilities, net--0.9% .................... 253,233 ----------- NET ASSETS--100.0% ........................................... $26,788,445 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $325,525 and gross depreciation of $258,603 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $26,468,290. (b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2001, these securities amounted to a value of $2,559,437 or 9.6% of net assets. (c) Non-income producing. (d) Security valued at fair value as determined in good faith by or under the direction of the Trustees. At December 31, 2001, this security, which is included in the illiquid securities below, amounted to a value of $4,250 or 0.02% of net assets. (e) Illiquid. At December 31, 2001, this security amounted to a value of $4,250 or 0.02% of net assets. (f) As rated by Moody's or Fitch. See Notes to Financial Statements 96 PHOENIX-JANUS FLEXIBLE INCOME SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $26,430,550) ........................ $26,535,212 Cash ................................................... 23,904 Receivables Interest ............................................. 383,574 Fund shares sold ..................................... 34,885 Prepaid expenses ....................................... 150 ----------- Total assets ....................................... 26,977,725 ----------- LIABILITIES Payables Investment securities purchased ...................... 89,604 Fund shares repurchased .............................. 36,867 Professional fee ..................................... 27,549 Printing fee ......................................... 18,189 Investment advisory fee .............................. 6,041 Financial agent fee .................................. 4,768 Trustees' fee ........................................ 3,262 Accrued expenses ....................................... 3,000 ----------- Total liabilities .................................. 189,280 ----------- NET ASSETS ............................................. $26,788,445 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ..... $26,736,811 Undistributed net investment income .................. 16,381 Accumulated net realized loss ........................ (69,409) Net unrealized appreciation .......................... 104,662 ----------- NET ASSETS ............................................. $26,788,445 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization .............................. 2,615,047 =========== Net asset value and offering price per share ........... $10.24 ====== STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Interest ............................................. $1,220,469 ---------- Total investment income ............................ 1,220,469 ---------- EXPENSES Investment advisory fee .............................. 156,044 Financial agent fee .................................. 52,045 Professional ......................................... 28,500 Printing ............................................. 22,102 Custodian ............................................ 17,626 Trustees ............................................. 8,431 Miscellaneous ........................................ 10,410 ---------- Total expenses ..................................... 295,158 Less expenses borne by investment adviser .......... (109,321) Custodian fees paid indirectly ..................... (539) ---------- Net expenses ....................................... 185,298 ---------- NET INVESTMENT INCOME .................................. 1,035,171 ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities ...................... 314,331 Net realized loss on foreign currency ................ (754) Net change in unrealized appreciation (depreciation) on investments ....................... (154,312) ---------- NET GAIN ON INVESTMENTS ................................ 159,265 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ... $1,194,436 ========== See Notes to Financial Statements 97 PHOENIX-JANUS FLEXIBLE INCOME SERIES STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ----------- ----------- FROM OPERATIONS Net investment income (loss) .................................................................. $ 1,035,171 $ 559,943 Net realized gain (loss) ...................................................................... 313,577 (202,563) Net change in unrealized appreciation (depreciation) .......................................... (154,312) 265,821 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................... 1,194,436 623,201 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ......................................................................... (1,025,894) (538,047) Net realized short-term gains ................................................................. (125,681) -- Net realized long-term gains .................................................................. (69,856) -- ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ..................................... (1,221,431) (538,047) ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (1,804,732 and 734,472 shares, respectively) .................... 18,830,362 7,378,359 Net asset value of shares issued from reinvestment of distributions (119,019 and 53,762 shares, respectively) ............................................................................... 1,221,431 538,047 Cost of shares repurchased (552,536 and 68,543 shares, respectively) .......................... (5,782,897) (686,671) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ..................................... 14,268,896 7,229,735 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS ......................................................... 14,241,901 7,314,889 NET ASSETS Beginning of period ........................................................................... 12,546,544 5,231,655 ----------- ----------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $16,381 AND $9,338, RESPECTIVELY) ............................................................................... $26,788,445 $12,546,544 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
YEAR ENDED DECEMBER 31, FROM INCEPTION ---------------------------- 12/15/99 TO 2001(8) 2000 12/31/99 ------ ------ -------------- Net asset value, beginning of period .... $10.09 $ 9.98 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .......... 0.55(7) 0.53 0.02 Net realized and unrealized gain (loss) 0.17 0.10 (0.02) ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .... 0.72 0.63 -- ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .. (0.49) (0.52) (0.02) Dividends from net realized gains ..... (0.08) -- -- ------ ------ ------ TOTAL DISTRIBUTIONS ................. (0.57) (0.52) (0.02) ------ ------ ------ CHANGE IN NET ASSET VALUE ............... 0.15 0.11 (0.02) ------ ------ ------ NET ASSET VALUE, END OF PERIOD .......... $10.24 $10.09 $ 9.98 ====== ====== ====== Total return ............................ 7.24% 6.43% 0.02%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ... $ 26,788 $ 12,547 $ 5,232 RATIO TO AVERAGE NET ASSETS OF: Operating expenses .................... 0.95%(4)(6) 1.00(4)(5) 0.95%(1)(3) Net investment income ................. 5.31% 6.63% 4.81%(1) Portfolio turnover rate ................. 305% 227% 0%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 8.18% for the period ended December 31, 1999. (4) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.51% and 2.47% for the periods ended December 31, 2001 and 2000, respectively. (5) For the year ended December 31, 2000, the ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees, if expense offsets were included, the ratio would have been 0.95%. (6) For the year ended December 31, 2001 the ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees, if expense offsets were included, the ratio would not significantly differ. (7) Computed using average shares outstanding. (8) As required, effective January 1, 2001, the Fund has adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. The effect of this change for the year ended December 31, 2001 was to decrease net investment income per share by $0.01, increase net realized and unrealized gains and losses per share by $0.01 and decrease the ratio of net investment income to average net assets from 5.41% to 5.31%. Per share ratios and supplemental data for prior periods have not been restated to reflect this change.
See Notes to Financial Statements 98 PHOENIX-JANUS GROWTH SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking long-term growth of capital in a manner consistent with the preservation of capital. INVESTMENT ADVISER'S REPORT Volatility was prevalent throughout much of the economic landscape in 2001. With unemployment rising to a six-year high and earnings by U.S. companies increasingly dismal, the Federal Reserve lowered interest rates 11 times to 1.75%. This influx of liquidity helped consumer spending hold up surprisingly well despite the terrorist attacks of September 11th. In this environment, the Portfolio fell 23.84%, underperforming its benchmark, the S&P 500 Index(1) which fell 11.87%. Among our top performers was Microsoft. While it may be surprising that a technology name gained ground during the year, the software giant is often considered a safe haven in the industry with its dominant market share and solid cash flow. Investor perception aside, the company reported a number of positive developments, including its antitrust settlement with the U.S. Justice Department. Though there are still pending lawsuits with nine states, the issue seems to be finally nearing a close. In addition, Microsoft launched Windows XP and gaming console Xbox. Elsewhere, one of our more defensive holdings, General Electric, ended the period in negative territory. Nonetheless, CEO Jeffrey Immelt said the company expects to grow earnings 17%-18% in 2002 during a recent meeting. Furthermore, GE plans to launch an aggressive acquisition campaign as a result of its strong balance sheet and weak economic conditions, which should enable it to take advantage of some excellent buying opportunities. OUTLOOK Going forward, the economic outlook continues to be uncertain. With that in mind, we will maintain our balanced investment approach. That is, weighing a company's risk against its reward while being valuation sensitive. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Growth Series S&P 500 Index(1) 12/15/99 $10,000.00 $10,000.00 12/31/99 10,599.90 10,400.00 12/29/00 9,415.93 9,444.51 12/31/01 7,171.17 8,322.99 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 12/15/99 TO 1 YEAR 12/31/01 - -------------------------------------------------------------------------- Growth Series (23.84)% (15.00)% - -------------------------------------------------------------------------- S&P 500 Index(1) (11.87)% (8.58)% - -------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 12/15/99 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. (1) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance. The index is not available for direct investment. 99 PHOENIX-JANUS GROWTH SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE ------- ----------- COMMON STOCKS--84.6% BANKS (MAJOR REGIONAL)--2.4% Bank of New York Co., Inc. (The) ................... 40,025 $ 1,633,020 ----------- BEVERAGES (ALCOHOLIC)--1.9% Anheuser-Busch Cos., Inc. .......................... 29,700 1,342,737 ----------- BROADCASTING (TELEVISION, RADIO & CABLE)--11.8% Cablevision Systems Corp.-Rainbow Media Group (b) .. 37,560 927,732 Cablevision Systems New York Group ................. 26,650 1,264,543 Comcast Corp. Class A (b) .......................... 83,190 2,994,840 Liberty Media Corp. Class A (b) .................... 206,900 2,896,600 ----------- 8,083,715 ----------- COMPUTERS (SOFTWARE & SERVICES)--6.9% Microsoft Corp. (b) ................................ 57,255 3,793,144 Oracle Corp. (b) ................................... 70,650 975,676 ----------- 4,768,820 ----------- ELECTRICAL EQUIPMENT--6.1% General Electric Co. ............................... 80,025 3,207,402 Symbol Technologies, Inc. .......................... 62,015 984,798 ----------- 4,192,200 ----------- ELECTRONICS (SEMICONDUCTORS)--4.2% Linear Technology Corp. ............................ 47,465 1,853,034 Texas Instruments, Inc. ............................ 38,245 1,070,860 ----------- 2,923,894 ----------- ENGINEERING & CONSTRUCTION--1.1% Fluor Corp ......................................... 20,655 772,497 ----------- ENTERTAINMENT--8.3% AOL Time Warner, Inc. (b) .......................... 60,425 1,939,642 Metro-Goldwyn-Maher, Inc. .......................... 36,895 808,001 Viacom, Inc. Class B (b) ........................... 66,275 2,926,041 ----------- 5,673,684 ----------- EQUIPMENT (SEMICONDUCTORS)--2.5% Applied Materials, Inc. (b) ........................ 42,820 1,717,082 ----------- FINANCIAL (DIVERSIFIED)--11.2% Citigroup, Inc. .................................... 72,950 3,682,516 Fannie Mae ......................................... 36,200 2,877,900 Morgan Stanley Dean Witter & Co. ................... 19,845 1,110,130 ----------- 7,670,546 ----------- GAMING, LOTTERY & PARI-MUTUEL COMPANIES--2.4% MGM Mirage, Inc. (b) ............................... 58,400 1,686,008 ----------- HEALTH CARE (DIVERSIFIED)--1.6% American Home Products Corp. ....................... 17,995 1,104,173 ----------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--10.6% Genentech, Inc. (b) ................................ 55,820 3,028,235 Pfizer, Inc. ....................................... 79,368 3,162,815 Schering-Plough Corp. .............................. 29,915 1,071,256 ----------- 7,262,306 ----------- SHARES VALUE ------- ----------- HOUSEHOLD PRODUCTS (NON-DURABLE)--1.7% Colgate-Palmolive Co. .............................. 20,080 $ 1,159,620 ----------- INVESTMENT BANKING/BROKERAGE--1.3% Schwab (Charles) Corp. (The) ....................... 57,375 887,591 ----------- MANUFACTURING (DIVERSIFIED)--1.4% Honeywell International, Inc. ...................... 27,610 933,770 ----------- OIL & GAS (EXPLORATION & PRODUCTION)--3.6% Anadarko Petroleum Corp. ........................... 43,025 2,445,971 ----------- OIL (INTERNATIONAL INTEGRATED)--0.9% Exxon Mobil Corp. .................................. 16,360 642,948 ----------- RETAIL (DRUG STORES)--1.8% Walgreen Co. ....................................... 37,150 1,250,469 ----------- RETAIL (GENERAL MERCHANDISE)--1.9% Wal-Mart Stores, Inc. .............................. 22,695 1,306,097 ----------- TELEPHONE--1.0% Qwest Communications International, Inc. ........... 48,940 691,522 ----------- TOTAL COMMON STOCKS (Identified cost $64,835,977) .............................. 58,148,670 ----------- FOREIGN COMMON STOCKS--9.2% COMMUNICATIONS EQUIPMENT--4.1% Nokia Oyj ADR (Finland) ............................ 115,645 2,836,772 ----------- ELECTRICAL EQUIPMENT--2.6% Flextronics International Ltd. (Singapore) (b) ..... 73,185 1,755,708 ----------- EQUIPMENT (SEMICONDUCTORS)--1.8% ASML Holdings NV Registered Shares (Netherlands) (b) 72,700 1,239,535 ----------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.7% Vodafone Group plc ADR (United Kingdom) ............ 19,325 496,266 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $9,217,297) ............................... 6,328,281 ----------- TOTAL LONG-TERM INVESTMENTS--93.8% (Identified cost $74,053,274) .............................. 64,476,951 ----------- STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) ----------- ------ SHORT-TERM OBLIGATIONS--6.4% COMMERCIAL PAPER--4.4% Tyco Capital Corp. 1.78%, 1/2/02 ........... A-1 $ 3,000 2,999,852 ----------- FEDERAL AGENCY SECURITIES--2.0% Freddie Mac 1.51%, 1/2/02 .................. AAA 1,400 1,399,941 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $4,399,793) ............................... 4,399,793 ----------- TOTAL INVESTMENTS--100.2% (Identified Cost $78,453,067) .............................. 68,876,744(a) Other assets and liabilities, net--(0.2)% .................. (133,699) ----------- NET ASSETS--100.0% ........................................... $68,743,045 =========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $3,357,640 and gross depreciation of $13,038,026 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $78,557,130. (b) Non-income producing. See Notes to Financial Statements 100 PHOENIX-JANUS GROWTH SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $78,453,067) ........................ $ 68,876,744 Cash ................................................... 2,675 Receivables Fund shares sold ..................................... 111,016 Dividends and interest ............................... 21,534 Prepaid expenses ....................................... 626 ------------ Total assets ....................................... 69,012,595 ------------ LIABILITIES Payables Fund shares repurchased .............................. 102,160 Printing fee ......................................... 80,453 Investment advisory fee .............................. 45,410 Professional fee ..................................... 27,911 Financial agent fee .................................. 7,464 Trustees' fee ........................................ 3,262 Accrued expenses ....................................... 2,890 ------------ Total liabilities .................................. 269,550 ------------ NET ASSETS ............................................. $ 68,743,045 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ..... $ 99,869,736 Accumulated net realized loss ........................ (21,550,368) Net unrealized depreciation .......................... (9,576,323) ------------ NET ASSETS ............................................. $ 68,743,045 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization .............................. 9,597,020 ============ Net asset value and offering price per share ........... $7.16 ===== STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends ............................................ $ 375,190 Interest ............................................. 141,518 Foreign taxes withheld ............................... (4,101) ------------ Total investment income ............................ 512,607 ------------ EXPENSES Investment advisory fee .............................. 586,240 Financial agent fee .................................. 91,833 Printing ............................................. 84,271 Professional ......................................... 29,584 Custodian ............................................ 13,353 Trustees ............................................. 8,766 Miscellaneous ........................................ 7,912 ------------ Total expenses ..................................... 821,959 Less expenses borne by investment adviser .......... (131,384) Custodian fees paid indirectly ..................... (878) ------------ Net expenses ....................................... 689,697 ------------ NET INVESTMENT LOSS .................................... (177,090) ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ...................... (19,633,207) Net change in unrealized appreciation (depreciation) on investments ...................... (53,121) ------------ NET LOSS ON INVESTMENTS ................................ (19,686,328) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ... $(19,863,418) ============ See Notes to Financial Statements 101 PHOENIX-JANUS GROWTH SERIES STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ------------ ------------ FROM OPERATIONS Net investment income (loss) ...................................................... $ (177,090) $ 75,928 Net realized gain (loss) .......................................................... (19,633,207) (1,917,161) Net change in unrealized appreciation (depreciation) .................................................................. (53,121) (9,656,464) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ....................... (19,863,418) (11,497,697) ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ............................................................. -- (76,831) ------------ ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ......................... -- (76,831) ------------ ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (5,787,397 and 8,295,438 shares, respectively) ................................................................... 46,048,090 90,957,466 Net asset value of shares issued from reinvestment of distributions (0 and 7,930 shares, respectively) ............................. -- 76,831 Cost of shares repurchased (3,580,790 and 1,221,888 shares, respectively) ................................................................... (26,949,606) (13,226,452) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ......................... 19,098,484 77,807,845 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ............................................. (764,934) 66,233,317 NET ASSETS Beginning of period ............................................................... 69,507,979 3,274,662 ------------ ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $0 AND $767, RESPECTIVELY) ................................................................... $ 68,743,045 $ 69,507,979 ============ ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
YEAR ENDED DECEMBER 31, FROM INCEPTION ------------------------- 12/15/99 TO 2001 2000 12/31/99 ------ ------ -------------- Net asset value, beginning of period .... $ 9.41 $10.60 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .......... (0.02)(5) 0.01 0.01 Net realized and unrealized gain (loss) (2.23) (1.19) 0.59 ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .... (2.25) (1.18) 0.60 ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .. -- (0.01) -- ------ ------ ------ TOTAL DISTRIBUTIONS ................. -- (0.01) -- ------ ------ ------ CHANGE IN NET ASSET VALUE ............... (2.25) (1.19) 0.60 ------ ------ ------ NET ASSET VALUE, END OF PERIOD .......... $ 7.16 $ 9.41 $10.60 ====== ====== ====== Total return ............................ (23.84)% (11.17)% 6.00%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ... $68,743 $69,508 $3,275 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ................ 1.00%(4) 1.00% 1.00%(1) Net investment income ................. (0.26)% 0.15% 1.61%(1) Portfolio turnover rate ................. 35% 16% 0%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.19%, 1.24% and 17.29% for the periods ended December 31, 2001, 2000 and 1999, respectively. (4) For the period ended December 31, 2001 the ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees, if expense offsets were included, the ratio would not significantly differ. (5) Computed using average shares outstanding.
See Notes to Financial Statements 102 PHOENIX-MFS INVESTORS GROWTH STOCK SERIES INVESTOR PROFILE This Fund is appropriate for investors seeking long-term growth of capital and future income rather than current income. INVESTMENT ADVISER'S REPORT For the 2 months ended December 31, 2001, the portfolio provided a total return of 6.89%. These returns, which include the reinvestment of any distributions, compare to a return of 7.58% over the same period for the portfolio benchmark, the Russell 1000 Growth Index(1). The Fund's return also compares to a 6.77% return over the same period for the the S&P 500 Index(2). Looking at the market for growth stocks overall, the past year was very difficult. Most market sectors suffered double-digit losses, and the losses were greatest in sectors that historically have held the greatest opportunities for growth investors -- such as technology and telecommunications. Throughout the year, we think uncertainty dampened investors' willingness to look beyond the next quarter or two of a company's potential performance. As a result, a number of companies that we viewed as long-term winners were severely punished for weakness we perceived as more short-term in nature. We saw this as an opportunity to buy these stocks, rather than withdraw into more-defensive issues or cash. We think our near-term underperformance was in large part a result of our remaining true to our style. We have stayed invested in growth stocks, we have not sought shelter in value stocks, and we have not retreated to a large cash position. Our shareholders have hired us to manage a large-cap growth portion of their overall portfolios, and that is how we have remained invested. And while the market penalized us for that discipline over the period, we believe we have positioned the fund to benefit in a recovering market. Our experience over a variety of market conditions has been that attempting to time the market by changing investment styles does not lead to strong long-term performance. On both an emotional and an economic level, the terrorist attacks of September 11th were the most significant event of the period. Beyond the human dimensions of the tragedy, which overshadow any other considerations, our sense is that September 11th accelerated an economic process that was already in place. We were in a period where corporate earnings were declining and the economy was slowing down. We think September 11th, by driving the market down sharply, may have caused it to reach a bottom earlier than would otherwise have been the case. The good news is that we think the conditions that may bring about a recovery are already in place. As of the end of the period, both interest rates and energy prices were down significantly from their peaks of about a year ago. Business inventories, which ballooned at the start of the economic downturn, have been drawn down to a point where we think new production will be necessary to meet demand. And companies have reined in their costs and reduced head count, which, although painful for employees in the short term, can make corporations more competitive in the long run. We think the combination of these factors points to a potential recovery in the second half of 2002. We would caution, however, that we believe whatever recovery we do get will be gradual, and some sectors will recover later than others. In the midst of a tough economic environment, our research uncovered opportunities in a number of areas over the period, and we adjusted the Portfolio's positioning to pursue those opportunities. Although we've kept a sizable piece of the portfolio invested in technology, our allocation to this sector has not been static. We reduced our exposure early in the period as corporate information technology spending ground to a virtual halt, causing inventories to mushroom and prices to plummet. Over the summer of 2001, however, we came to believe the sector was approaching a bottom. Stock valuations in many cases had come down to what we felt were attractive levels, inventories were down, and we saw signs of a slight uptick in demand. We began to selectively increase our technology exposure--for the first time in nearly two years. We don't expect technology spending to rebound to pre-2001 highs, but we do think the case can be made for gradual improvement over the coming 12 to 24 months. We also believe that a recovery won't be uniform across all areas of technology. For this reason, we favored software and semiconductor stocks over networking and telecommunications equipment stocks. Health care, leisure, and financial services stocks were three other areas where we found opportunity. Health care was a case in which valuations (stock prices in relation to factors such as earnings and cash flow) had risen in late 2000 to levels that we felt were too high, as investors sought alternatives to technology stocks. When health care valuations corrected in the first half of 2001, we seized the opportunity to increase our exposure to several pharmaceutical firms that we felt had promising products in their pipelines. (1) The Russell 1000 Growth Index is an unmanaged, commonly used measure of large-cap growth-oriented stock total return performance. (2) The S&P 500 is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. The indices are not available for direct investment. Returns indicate past performance, which is not predictive of future performance. 103 PHOENIX-MFS INVESTORS GROWTH STOCK SERIES Later in the period, we invested in several drug distribution firms that act as middlemen between drug manufacturers and large volume purchasers, such as hospitals and pharmacy chains. We felt the market was underestimating the long-term value of some of these distributors, especially those that had been effective in helping their customers cut costs. In the leisure sector, most of our investments were in advertising-sensitive media firms. Historically, advertising has been one of the first areas to suffer in a downturn, as corporations look for ways to cut expenses, and one of the first areas to benefit from a recovery. In retrospect, we may have been too early, although we still believe we are invested in the right companies. Over the period, our leisure investments did not perform as well as we had hoped. However, we believe that, in a reviving economy, these stocks could benefit as the market recognizes the firms that have been gaining market share during the downturn. In the financial services area, we have been invested in several commercial property and casualty insurance firms for some time. Over a year ago, our analysts saw the potential for a turnaround in this industry, which had been in a slump for over a decade. Underwriting losses had reduced the capacity to write policies, allowing insurance firms to raise policy prices for the first time in many years. Although the events of September 11th seemed to be a debacle for insurance firms, we would argue quite the opposite case. Strong companies with the reserves to sustain losses from the terrorist attacks may, we believe, find themselves with more pricing power as weaker competitors exit the business. In addition, we think demand for insurance coverage could increase in this environment. NOTES TO SHAREHOLDERS: EFFECTIVE WITH THIS REPORT, THE RUSSELL 1000 GROWTH INDEX HAS REPLACED THE STANDARD & POOR'S 500 STOCK INDEX (THE S&P 500) AS THE PORTFOLIO' BENCHMARK. WE BELIEVE THE RUSSELL 1000 GROWTH INDEX MORE ACCURATELY REFLECTS OUR GROWTH DISCIPLINE, OFFERING INVESTORS A MORE RELIABLE OBJECTIVE MEASURE OF THE PORTFOLIO'S PERFORMANCE. FOR COMPARISON, WE WILL ALSO CONTINUE TO PROVIDE RETURNS FOR THE S&P 500, A COMMONLY USED MEASURE OF THE BROAD STOCK MARKET. 104 PHOENIX-MFS INVESTORS GROWTH STOCK SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE ------ ---------- COMMON STOCKS--88.7% AEROSPACE/DEFENSE--0.6% Northrop Grumman Corp. ........................... 220 $ 22,178 ---------- AIR FREIGHT--0.7% FedEx Corp. (b) .................................. 560 29,053 ---------- BANKS (MAJOR REGIONAL)--0.6% Mellon Financial Corp. ........................... 650 24,453 ---------- BANKS (MONEY CENTER)--0.4% Bank of America Corp. ............................ 270 16,996 ---------- BEVERAGES (ALCOHOLIC)--0.3% Anheuser-Busch Cos., Inc. ........................ 260 11,755 ---------- BEVERAGES (NON-ALCOHOLIC)--0.7% PepsiCo, Inc. .................................... 550 26,779 ---------- BIOTECHNOLOGY--2.4% Amgen, Inc. (b) .................................. 770 43,459 Genzyme Corp. (b) ................................ 670 40,106 MedImmune, Inc. (b) .............................. 210 9,733 ---------- 93,298 ---------- BROADCASTING (TELEVISION, RADIO & CABLE)--1.9% Clear Channel Communications, Inc. (b) ........... 990 50,401 Comcast Corp. Class A (b) 690 24,840 ---------- 75,241 ---------- CHEMICALS--0.8% Praxair, Inc. .................................... 540 29,835 ---------- COMMUNICATIONS EQUIPMENT--0.7% QUALCOMM, Inc. (b) ............................... 520 26,260 ---------- COMPUTERS (HARDWARE)--3.3% Brocade Communications Systems, Inc. (b) ......... 440 14,572 Dell Computer Corp. (b) .......................... 1,360 36,965 International Business Machines Corp. ............ 430 52,013 Sun Microsystems, Inc. (b) ....................... 2,230 27,429 ---------- 130,979 ---------- COMPUTERS (NETWORKING)--1.0% Cisco Systems, Inc. (b) .......................... 2,250 40,747 ---------- COMPUTERS (PERIPHERALS)--0.4% EMC Corp. (b) .................................... 150 2,016 Lexmark International, Inc. (b) .................. 200 11,800 ---------- 13,816 ---------- COMPUTERS (SOFTWARE & SERVICES)--7.5% Adobe Systems, Inc. .............................. 440 13,662 Cadence Design Systems, Inc. (b) ................. 1,050 23,016 eBay, Inc. (b) ................................... 250 16,725 Intuit, Inc. (b) ................................. 280 11,979 Microsoft Corp. (b) .............................. 1,040 68,900 Oracle Corp. (b) ................................. 2,840 39,220 PeopleSoft, Inc. (b) ............................. 470 18,894 VeriSign, Inc. (b) ............................... 520 19,781 VERITAS Software Corp. (b) ....................... 1,840 82,487 ---------- 294,664 ---------- CONSUMER FINANCE--1.4% Capital One Financial Corp. ...................... 680 36,686 Household International,Inc. ..................... 330 19,120 ---------- 55,806 ---------- DISTRIBUTORS (FOOD & HEALTH)--0.9% ARAMARK Corp. Class B (b) ........................ 10 269 Cardinal Health, Inc. ............................ 530 34,270 ---------- 34,539 ---------- SHARES VALUE ------ ---------- ELECTRICAL EQUIPMENT--1.1% General Electric Co. ............................. 1,110 $ 44,489 ---------- ELECTRONICS (SEMICONDUCTORS)--3.9% Analog Devices, Inc. (b) ......................... 960 42,615 Linear Technology Corp. .......................... 860 33,574 Maxim Integrated Products, Inc. (b) .............. 20 1,050 Micron Technology, Inc. (b) ...................... 990 30,690 National Semiconductor Corp. (b) ................. 470 14,471 Texas Instruments, Inc. .......................... 1,120 31,360 ---------- 153,760 ---------- ENTERTAINMENT--3.5% AOL Time Warner, Inc. (b) ........................ 850 27,285 Viacom, Inc. Class B (b) ......................... 2,470 109,050 ---------- 136,335 ---------- FINANCIAL (DIVERSIFIED)--5.5% American Express Co. ............................. 1,250 44,613 Citigroup, Inc. .................................. 1,330 67,139 Freddie Mac ...................................... 820 53,628 Morgan Stanley Dean Witter & Co. ................. 760 42,514 Prudential Financial, Inc. (b) ................... 280 9,293 ---------- 217,187 ---------- FOODS--0.5% General Mills, Inc. .............................. 400 20,804 ---------- FOOTWEAR--0.8% NIKE, Inc. Class B ............................... 550 30,932 ---------- HEALTH CARE (DIVERSIFIED)--5.8% Abbott Laboratories .............................. 1,120 62,440 American Home Products Corp. ..................... 1,440 88,358 Johnson & Johnson ................................ 1,340 79,194 ---------- 229,992 ---------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--5.9% Allergan, Inc. ................................... 240 18,012 Forest Laboratories, Inc. (b) .................... 570 46,711 Genentech, Inc. (b) .............................. 240 13,020 Lilly (Eli) & Co. ................................ 590 46,339 Pfizer, Inc. ..................................... 2,730 108,791 ---------- 232,873 ---------- HEALTH CARE (HOSPITAL MANAGEMENT)--0.7% HCA, Inc. ........................................ 730 28,134 ---------- HEALTH CARE (MANAGED CARE)--1.2% UnitedHealth Group, Inc. ......................... 670 47,416 ---------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.2% Applied Biosystems Group - Applera Corp. ......... 630 24,740 Baxter International, Inc. ....................... 210 11,262 Boston Scientific Corp. (b) ...................... 390 9,407 ---------- 45,409 ---------- HOUSEHOLD PRODUCTS (NON-DURABLE)--0.2% Kimberly-Clark Corp. ............................. 110 6,578 ---------- INSURANCE (LIFE/HEALTH)--0.2% Principal Financial Group (The), Inc. (b) ........ 270 6,480 ---------- INSURANCE (MULTI-LINE)--1.8% American International Group, Inc. ............... 900 71,460 ---------- INSURANCE BROKERS--0.4% Marsh & McLennan Cos., Inc. ...................... 140 15,043 ---------- See Notes to Financial Statements 105 PHOENIX-MFS INVESTORS GROWTH STOCK SERIES SHARES VALUE ------ ---------- INVESTMENT BANKING/BROKERAGE--2.6% Goldman Sachs Group, Inc. (The) .................. 550 $ 51,013 Merrill Lynch & Co., Inc. ........................ 860 44,823 Schwab (Charles) Corp. (The) ..................... 390 6,033 ---------- 101,869 ---------- LEISURE TIME (PRODUCTS)--1.2% Harley-Davidson, Inc. ............................ 830 45,077 ---------- LODGING - HOTELS--0.5% Carnival Corp. ................................... 620 17,410 Starwood Hotels & Resorts Worldwide, Inc. ........ 110 3,283 ---------- 20,693 ---------- MANUFACTURING (DIVERSIFIED)--8.2% Danaher Corp. .................................... 710 42,820 Illinois Tool Works, Inc. ........................ 600 40,632 Minnesota Mining and Manufacturing Co. ........... 550 65,016 Tyco International Ltd. .......................... 2,940 173,166 ---------- 321,634 ---------- NATURAL GAS--0.2% El Paso Corp. .................................... 200 8,922 ---------- OIL & GAS (EXPLORATION & PRODUCTION)--0.4% Devon Energy Corp. ............................... 430 16,620 ---------- PERSONAL CARE--1.7% Avon Products, Inc. .............................. 530 24,645 Estee Lauder Cos., Inc. (The) Class A ............ 200 6,412 Gillette Co. (The) ............................... 1,050 35,070 ---------- 66,127 ---------- POWER PRODUCERS (INDEPENDENT)--0.1% Calpine Corp. (b) ................................ 320 5,373 ---------- RESTAURANTS--0.5% Tricon Global Restaurants, Inc. (b) .............. 430 21,156 ---------- RETAIL (BUILDING SUPPLIES)--3.0% Home Depot, Inc. (The) ........................... 750 38,258 Lowe's Cos., Inc. ................................ 1,720 79,825 ---------- 118,083 ---------- RETAIL (DEPARTMENT STORES)--0.8% Kohl's Corp. (b) ................................. 470 33,107 ---------- RETAIL (DRUG STORES)--0.2% CVS Corp. ........................................ 320 9,472 ---------- RETAIL (FOOD CHAINS)--0.4% Safeway, Inc. (b) ................................ 350 14,613 ---------- RETAIL (GENERAL MERCHANDISE)--4.1% Costco Wholesale Corp. (b) ....................... 970 43,049 Target Corp. ..................................... 2,230 91,541 Wal-Mart Stores, Inc. ............................ 480 27,624 ---------- 162,214 ---------- RETAIL (SPECIALTY)--0.3% Staples, Inc. (b) ................................ 710 13,277 ---------- RETAIL (SPECIALTY-APPAREL)--0.2% Gap, Inc. (The) .................................. 520 7,249 ---------- SERVICES (ADVERTISING/MARKETING)--0.6% Omnicom Group, Inc. .............................. 250 22,338 ---------- SERVICES (COMMERCIAL & CONSUMER)--0.8% Cendant Corp. (b) ................................ 1,690 33,141 ---------- SHARES VALUE ------ ---------- SERVICES (COMPUTER SYSTEMS)--0.6% Electronic Data Systems Corp. .................... 370 $ 25,364 ---------- SERVICES (DATA PROCESSING)--3.9% Automatic Data Processing, Inc. .................. 840 49,476 Concord EFS, Inc. (b) ............................ 510 16,718 First Data Corp. ................................. 1,090 85,510 ---------- 151,704 ---------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)--1.1% AT&T Wireless Services, Inc. (b) ................. 1,430 20,549 Sprint Corp. (PCS Group) (b) ..................... 920 22,457 ---------- 43,006 ---------- TOBACCO--0.4% Philip Morris Cos., Inc. ......................... 330 15,131 ---------- TRUCKERS--0.6% United Parcel Service, Inc. Class B .............. 410 22,345 ---------- TOTAL COMMON STOCKS (Identified cost $3,290,449) ............................... 3,491,806 ---------- FOREIGN COMMON STOCKS--6.8% BEVERAGES (ALCOHOLIC)--0.0% Diageo plc (United Kingdom) ...................... 140 1,599 ---------- COMMUNICATIONS EQUIPMENT--1.1% Nokia Oyj ADR (Finland) .......................... 1,670 40,965 ---------- COMPUTERS (SOFTWARE & SERVICES)--0.2% SAP AG (Germany) ................................. 70 9,175 ---------- ELECTRONICS (SEMICONDUCTORS)--1.2% STMicroelectronics NV (Switzerland) .............. 770 24,386 Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan)(b) ........................... 1,270 21,806 ---------- 46,192 ---------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--1.1% Sanofi-Synthelabo SA (France) .................... 580 43,276 ---------- INSURANCE (PROPERTY-CASUALTY)--2.4% ACE Ltd. (Bermuda) ............................... 1,260 50,589 XL Capital Ltd. Class A (Bermuda) ................ 460 42,026 ---------- 92,615 ---------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.8% Vodafone Group plc ADR (United Kingdom) .......... 1,268 32,562 ---------- TOTAL FOREIGN COMMON STOCKS (Identified cost $243,221) ................................. 266,384 ---------- TOTAL LONG-TERM INVESTMENTS--95.5% (Identified cost $3,533,670) ............................... 3,758,190 ---------- STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) ----------- ----- SHORT-TERM OBLIGATIONS--5.4% FEDERAL AGENCY SECURITIES--5.4% Freddie Mac 1.49%, 1/2/02 ................. AAA $212 211,991 ---------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $211,991) ................................. 211,991 ---------- TOTAL INVESTMENTS--100.9% (Identified cost $3,745,661) ............................... 3,970,181(a) Other assets and liabilities, net--(0.9)% .................. (35,532) ---------- NET ASSETS--100.0% $3,934,649 ========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $260,813 and gross depreciation of $48,035 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $3,757,403. (b) Non-income producing. See Notes to Financial Statements 106 PHOENIX-MFS INVESTORS GROWTH STOCK SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $3,745,661) ..... $3,970,181 Cash ............................................................ 1,995 Receivables Fund shares sold .............................................. 15,646 Receivable from adviser ....................................... 15,180 Dividends ..................................................... 1,549 ---------- Total assets ................................................ 4,004,551 ---------- LIABILITIES Payables Investment securities purchased ............................... 40,388 Fund shares repurchased ....................................... 29 Professional fee .............................................. 17,824 Printing fee .................................................. 6,623 Financial agent fee ........................................... 3,217 Trustees' fee ................................................. 1,266 Accrued expenses ................................................ 555 ---------- Total liabilities ........................................... 69,902 ---------- NET ASSETS ...................................................... $3,934,649 ========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest .............. $3,721,261 Undistributed net investment income ........................... 295 Accumulated net realized loss ................................. (11,427) Net unrealized appreciation ................................... 224,520 ---------- NET ASSETS ...................................................... $3,934,649 ========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ......................... 368,091 ========== Net asset value and offering price per share .................... $10.69 ====== STATEMENT OF OPERATIONS FROM INCEPTION OCTOBER 29, 2001 TO DECEMBER 31, 2001 INVESTMENT INCOME Dividends ..................................................... $ 4,391 Interest ...................................................... 1,447 Foreign taxes withheld ........................................ (41) -------- Total investment income ..................................... 5,797 -------- EXPENSES Investment advisory fee ....................................... 4,483 Financial agent fee ........................................... 6,642 Professional .................................................. 17,824 Printing ...................................................... 6,637 Custodian ..................................................... 3,323 Trustees ...................................................... 1,266 Miscellaneous ................................................. 968 -------- Total expenses .............................................. 41,143 Less expenses borne by investment adviser ................... (35,454) Custodian fees paid indirectly .............................. (9) -------- Net expenses ................................................ 5,680 -------- NET INVESTMENT INCOME ........................................... 117 -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ............................... (11,427) Net realized gain on foreign currency transaction ............. 178 Net change in unrealized appreciation (depreciation) on investments .............................................. 224,520 -------- NET GAIN ON INVESTMENTS ......................................... 213,271 -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............ $213,388 ======== See Notes to Financial Statements 107 PHOENIX-MFS INVESTORS GROWTH STOCK SERIES STATEMENT OF CHANGES IN NET ASSETS FROM INCEPTION 10/29/01 TO 12/31/01 -------------- FROM OPERATIONS Net investment income (loss) ................................ $ 117 Net realized gain (loss) .................................... (11,249) Net change in unrealized appreciation (depreciation) ........ 224,520 ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS . 213,388 ---------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (368,506 shares) .............. 3,725,658 Cost of shares repurchased (415 shares) ..................... (4,397) ---------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ... 3,721,261 ---------- NET INCREASE (DECREASE) IN NET ASSETS ....................... 3,934,649 NET ASSETS Beginning of period ......................................... -- ---------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $295) ........................................... $3,934,649 ========== FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) FROM INCEPTION 10/29/01 TO 12/31/01 -------------- Net asset value, beginning of period .......................... $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ................................ --(4) Net realized and unrealized gain (loss) ..................... 0.69 ------ TOTAL FROM INVESTMENT OPERATIONS .......................... 0.69 ------ CHANGE IN NET ASSET VALUE ..................................... 0.69 ------ NET ASSET VALUE, END OF PERIOD ................................ $10.69 ====== Total return .................................................. 6.89%(3) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ....................... $3,935 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) ....................................... 0.95%(2)(5) Net investment income (loss) ................................ 0.02%(2) Portfolio turnover rate ....................................... 34%(3) (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 6.88% for the period ended December 31, 2001. (2) Annualized. (3) Not annualized. (4) Amount is less than $0.01. (5) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. See Notes to Financial Statements 108 PHOENIX-MFS INVESTORS TRUST SERIES INVESTOR PROFILE This Fund is appropriate for investors seeking long-term growth of capital and secondarily the provision of reasonable current income. INVESTMENT ADVISER'S REPORT Since its inception on October 29, 2001, the Fund provided a total return of 4.25%, including the reinvestment of any dividends and capital gain distributions. These returns compare to a 6.77% return during the same period for the Fund's benchmark, the S&P 500 Index(1). With most of the broader market averages posting double-digit losses for the second straight year, it's been one of the most difficult periods for equity investors in over 30 years. Some of the factors influencing stocks prices over the past year were the terrorist attacks, the reduction in consumer and corporate spending, and the first recession in a decade. While all these factors are important to note, we think it's important to point out that the primary reason stocks are down so dramatically this year is because earnings and earnings prospects for many companies have gone down dramatically. Despite this difficult environment, our primary objective remains to look for high-quality companies with superior growth characteristics whose stocks are selling at reasonable prices based on our in-house research. We remain committed to this approach, which is designed to try to outperform the broad U.S. equity market over time but with less volatility. While we are always looking for stocks that we believe are trading at attractive valuations, first and foremost, we would describe ourselves as growth investors. As a result, one of the biggest issues we faced early in the year was that it was a difficult time to be a growth at the right price manager and many of the traditional growth stocks that we believed were trading at reasonable valuations performed poorly during the year. In particular, Safeway, which was one of the larger positions in the portfolio, lost a lot of value despite posting healthy earnings growth and possessing what we believed were strong business fundamentals. The other area that hurt us early in the year was healthcare. As we looked at the economy, we felt there was a good chance that economic activity would be relatively weak throughout this year. Given this environment, and based on our fundamental research, healthcare offered some of the best growth at the right price opportunities in the market in our view. In particular, the pharmaceutical companies looked most attractive to us. However, two things happened. First, the market didn't agree with us, so many investors weren't focused on this industry. Second, the industry was hurt by a slowdown in approvals for new drugs by the Food and Drug Administration. This meant that new drug launches got pushed back and investors became concerned that new revenue streams for the entire industry would be deferred. We saw this as an opportunity, so we maintained our large weighting in healthcare, and we added to them throughout the year. In recent months, our health care holdings were some of the better contributors to the performance and remained a core component of our investment strategy. The second largest sector allocation is our well-diversified mix of financial services companies with a focus on government-sponsored mortgage enterprises such as the Federal Home Loan Mortgage Corporation. Other significant holdings include, insurance provider American International Group, diversified-financial services company Citibank, and First Data Corporation, which provide payment services and transaction processing to the financial services industry. In our view, these companies are attractively valued with strong balance sheets and they offer a diversified way to take part in a future rebound in the capital markets. OUTLOOK Our outlook remains cautious looking into 2002. We're somewhat concerned about the quick rebound after September 11th because typically the market recovers roughly six months before the end of a recession, and we think the market may be in for a longer period of weak earnings before we see a recovery. However, we believe the series is well-positioned in this environment. We maintained our long term and valuation-sensitive orientation, currently holding a heavier concentration of diversified, high-quality financial services companies and defensive health care stocks. At the same time, we have sizeable exposure to cyclical areas of the market such as technology, retailing, and media and broadcasting because we think these areas could lead the market once an economic recovery takes hold. (1) The S&P 500 is an unmanaged, commonly used measure of stock market total return performance. The index is not available for direct investment. Returns indicate past performance, which is not predictive of future performance. 109 PHOENIX-MFS INVESTORS TRUST SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE ------ --------- COMMON STOCKS--87.0% AEROSPACE/DEFENSE--0.6% Boeing Co. (The) .................................. 130 $ 5,041 General Dynamics Corp. ............................ 110 8,760 Northrop Grumman Corp. ............................ 70 7,057 ---------- 20,858 ---------- AIR FREIGHT--0.2% FedEx Corp. (b) ................................... 150 7,782 ---------- ALUMINUM--0.9% Alcoa, Inc. ....................................... 860 30,573 ---------- BANKS (MAJOR REGIONAL)--2.7% Comerica, Inc. .................................... 310 17,763 FleetBoston Financial Corp. ....................... 310 11,315 Mellon Financial Corp. ............................ 120 4,514 PNC Financial Services Group ...................... 250 14,050 SouthTrust Corp. .................................. 70 1,727 U.S. Bancorp ...................................... 200 4,186 Wells Fargo & Co. ................................. 870 37,802 ---------- 91,357 ---------- BANKS (MONEY CENTER)--1.1% Bank of America Corp. ............................. 600 37,770 ---------- BEVERAGES (ALCOHOLIC)--1.0% Anheuser-Busch Cos., Inc. ......................... 730 33,003 ---------- BEVERAGES (NON-ALCOHOLIC)--0.9% Coca-Cola Co. (The) ............................... 170 8,016 PepsiCo, Inc. ..................................... 460 22,397 ---------- 30,413 ---------- BROADCASTING (TELEVISION, RADIO & CABLE)--0.8% Clear Channel Communications, Inc. (b) ............ 460 23,419 Comcast Corp. Class A (b) ......................... 110 3,960 ---------- 27,379 ---------- CHEMICALS--1.0% Air Products and Chemicals, Inc. .................. 90 4,222 Du Pont (E.I.) de Nemours & Co. ................... 90 3,826 Praxair, Inc. ..................................... 330 18,233 Rohm & Haas Co. ................................... 180 6,233 ---------- 32,514 ---------- COMMUNICATIONS EQUIPMENT--0.6% CIENA Corp. (b) ................................... 120 1,717 Comverse Technology, Inc. (b) ..................... 20 448 Lucent Technologies, Inc. (b) ..................... 80 503 Motorola, Inc. .................................... 950 14,269 QUALCOMM, Inc. (b) ................................ 70 3,535 ---------- 20,472 ---------- COMPUTERS (HARDWARE)--3.4% Compaq Computer Corp. ............................. 520 5,075 Dell Computer Corp. (b) ........................... 660 17,939 International Business Machines Corp. ............. 730 88,301 Sun Microsystems, Inc. (b) ........................ 360 4,428 ---------- 115,743 ---------- COMPUTERS (NETWORKING)--0.7% Cisco Systems, Inc. (b) ........................... 1,220 22,094 ---------- COMPUTERS (PERIPHERALS)--0.1% EMC Corp. (b) ..................................... 180 2,419 Lexmark International, Inc. (b) ................... 40 2,360 ---------- 4,779 ---------- SHARES VALUE ------ --------- COMPUTERS (SOFTWARE & SERVICES)--4.7% Adobe Systems, Inc. ............................... 450 $ 13,972 Amdocs Ltd.(b) .................................... 150 5,095 BMC Software, Inc. (b) ............................ 350 5,729 Cadence Design Systems, Inc. (b) .................. 40 877 Microsoft Corp. (b) ............................... 1,190 78,838 Oracle Corp. (b) .................................. 2,430 33,558 VeriSign, Inc. (b) ................................ 40 1,522 VERITAS Software Corp. (b) ........................ 450 20,174 ---------- 159,765 ---------- CONSUMER FINANCE--0.6% Capital One Financial Corp. ....................... 400 21,580 ---------- DISTRIBUTORS (FOOD & HEALTH)--0.7% Cardinal Health, Inc. 310 20,044 McKesson Corp. 30 1,122 SYSCO Corp. 90 2,360 ---------- 23,526 ---------- ELECTRIC COMPANIES--1.5% Dominion Resources, Inc. .......................... 270 16,227 Duke Energy Corp. ................................. 400 15,704 Exelon Corp. ...................................... 430 20,588 ---------- 52,519 ---------- ELECTRICAL EQUIPMENT--3.1% General Electric Co. .............................. 2,630 105,410 ---------- ELECTRONICS (COMPONENT DISTRIBUTORS)--0.0% Grainger (W.W.), Inc. ............................. 20 960 ---------- ELECTRONICS (INSTRUMENTATION)--0.0% Tektronix, Inc. (b) ............................... 50 1,289 ---------- ELECTRONICS (SEMICONDUCTORS)--1.9% Analog Devices, Inc. (b) .......................... 650 28,853 Intel Corp. ....................................... 540 16,983 Linear Technology Corp. ........................... 100 3,904 LSI Logic Corp. (b) ............................... 70 1,105 Texas Instruments, Inc. ........................... 540 15,120 ---------- 65,965 ---------- ENTERTAINMENT--2.3% AOL Time Warner, Inc. (b) ......................... 900 28,890 Viacom, Inc. Class B (b) .......................... 1,110 49,006 Walt Disney Co. (The) ............................. 40 829 ---------- 78,725 ---------- EQUIPMENT (SEMICONDUCTORS)--0.1% Lam Research Corp. (b) ............................ 30 697 Novellus Systems, Inc. (b) ........................ 90 3,550 ---------- 4,247 ---------- FINANCIAL (DIVERSIFIED)--7.6% Citigroup, Inc. ................................... 1,290 65,119 Fannie Mae ........................................ 490 38,955 Freddie Mac ....................................... 1,560 102,024 Morgan Stanley Dean Witter & Co. .................. 180 10,069 State Street Corp. ................................ 800 41,800 ---------- 257,967 ---------- FOODS--0.1% Kellogg Co. ....................................... 110 3,311 ---------- FOOTWEAR--0.1% NIKE, Inc. Class B ................................ 40 2,250 ---------- See Notes to Financial Statements 110 PHOENIX-MFS INVESTORS TRUST SERIES SHARES VALUE ------ --------- HEALTH CARE (DIVERSIFIED)--4.7% Abbott Laboratories ............................... 260 $ 14,495 American Home Products Corp. ...................... 1,050 64,428 Bristol-Myers Squibb Co. .......................... 550 28,050 Johnson & Johnson ................................. 920 54,372 ---------- 161,345 ---------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--6.5% Allergan, Inc. .................................... 180 13,509 Genentech, Inc. (b) ............................... 220 11,935 Lilly (Eli) & Co. ................................. 930 73,042 Merck & Co., Inc .................................. 70 4,116 Pfizer, Inc. ...................................... 2,360 94,046 Schering-Plough Corp. ............................. 690 24,709 ---------- 221,357 ---------- HEALTH CARE (HOSPITAL MANAGEMENT)--0.6% HCA, Inc. ......................................... 570 21,968 ---------- HEALTH CARE (MANAGED CARE)--1.0% CIGNA Corp. ....................................... 300 27,795 UnitedHealth Group, Inc. .......................... 70 4,954 ---------- 32,749 ---------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--2.1% Applied Biosystems Group - Applera Corp. .......... 870 34,165 Guidant Corp. (b) ................................. 720 35,856 Stryker Corp. ..................................... 20 1,167 ---------- 71,188 ---------- HOUSEHOLD PRODUCTS (NON-DURABLE)--1.5% Colgate-Palmolive Co. ............................. 120 6,930 Kimberly-Clark Corp. .............................. 20 1,196 Procter & Gamble Co. (The) ........................ 530 41,939 ---------- 50,065 ---------- INSURANCE (LIFE/HEALTH)--1.2% AFLAC, Inc. ....................................... 430 10,561 Lincoln National Corp. ............................ 110 5,342 MetLife, Inc. ..................................... 560 17,741 UnumProvident Corp. ............................... 280 7,423 ---------- 41,067 ---------- INSURANCE (MULTI-LINE)--2.9% American International Group, Inc. ................ 1,000 79,400 Hartford Financial Services Group, Inc. (The) ..... 330 20,734 ---------- 100,134 ---------- INSURANCE (PROPERTY-CASUALTY)--1.1% Allstate Corp. (The) .............................. 80 2,696 Chubb Corp. (The) ................................. 10 690 St. Paul Cos., Inc. (The) ......................... 790 34,736 ---------- 38,122 ---------- INSURANCE BROKERS--0.2% Marsh & McLennan Cos., Inc. ....................... 70 7,522 ---------- INVESTMENT BANKING/BROKERAGE--0.8% Goldman Sachs Group, Inc. (The) ................... 140 12,985 Lehman Brothers Holdings, Inc. .................... 20 1,336 Merrill Lynch & Co., Inc. ......................... 220 11,466 ---------- 25,787 ---------- LODGING - HOTELS--0.0% Starwood Hotels & Resorts Worldwide, Inc. ......... 30 896 ---------- MACHINERY (DIVERSIFIED)--0.9% Caterpillar, Inc. ................................. 40 2,090 Deere & Co. ....................................... 580 25,323 Ingersoll-Rand Co. ................................ 40 1,672 ---------- 29,085 ---------- SHARES VALUE ------ --------- MANUFACTURING (DIVERSIFIED)--2.6% Danaher Corp. ..................................... 170 $ 10,253 Minnesota Mining and Manufacturing Co. ............ 230 27,188 Tyco International Ltd. ........................... 880 51,832 ---------- 89,273 ---------- MANUFACTURING (SPECIALIZED)--0.0% Avery Dennison Corp. .............................. 20 1,131 ---------- NATURAL GAS--1.3% Dynegy, Inc. Class A .............................. 110 2,805 El Paso Corp. ..................................... 500 22,305 KeySpan Corp. ..................................... 40 1,386 NiSource, Inc. .................................... 350 8,071 Williams Cos., Inc. (The) ......................... 410 10,463 ---------- 45,030 ---------- OIL--0.5% Conoco, Inc. ...................................... 460 13,018 Occidental Petroleum Corp. ........................ 120 3,184 ---------- 16,202 ---------- OIL & GAS (DRILLING & EQUIPMENT)--0.0% Baker Hughes, Inc. ................................ 40 1,459 ---------- OIL & GAS (EXPLORATION & PRODUCTION)--0.7% Anadarko Petroleum Corp. .......................... 190 10,802 Apache Corp. ...................................... 164 8,180 Devon Energy Corp. ................................ 140 5,411 ---------- 24,393 ---------- OIL (INTERNATIONAL INTEGRATED)--3.4% ChevronTexaco Corp. ............................... 90 8,065 Exxon Mobil Corp. ................................. 2,700 106,110 ---------- 114,175 ---------- PAPER & FOREST PRODUCTS--0.8% International Paper Co. ........................... 630 25,421 ---------- PERSONAL CARE--0.7% Estee Lauder Cos., Inc. (The) Class A ............. 20 641 Gilliette Co. (The) ............................... 690 23,046 ---------- 23,687 ---------- POWER PRODUCERS (INDEPENDENT)--0.1% Calpine Corp. (b) 140 2,351 ---------- PUBLISHING--0.4% McGraw-Hill Cos., Inc. (The) ...................... 200 12,196 ---------- PUBLISHING (NEWSPAPERS)--1.9% Gannett Co., Inc. ................................. 460 30,926 New York Times Co. (The) Class A .................. 770 33,302 ---------- 64,228 ---------- RESTAURANTS--0.1% McDonald's Corp. .................................. 90 2,382 ---------- RETAIL (BUILDING SUPPLIES)--0.3% Home Depot, Inc. (The) ............................ 70 3,571 Lowe's Cos., Inc. ................................. 110 5,105 ---------- 8,676 ---------- RETAIL (DISCOUNTERS)--0.0% Family Dollar Stores, Inc. ........................ 20 600 ---------- RETAIL (DRUG STORES)--0.1% Walgreen Co. ...................................... 50 1,683 ---------- RETAIL (FOOD CHAINS)--2.5% Kroger Co. (The) (b) .............................. 970 20,244 Safeway, Inc. (b) ................................. 1,540 64,295 ---------- 84,539 ---------- See Notes to Financial Statements 111 PHOENIX-MFS INVESTORS TRUST SERIES SHARES VALUE ------ --------- RETAIL (GENERAL MERCHANDISE)--2.6% Costco Wholesale Corp. (b) ........................ 100 $ 4,438 Sears, Roebuck and Co. ............................ 420 20,009 Target Corp. ...................................... 500 20,525 Wal-Mart Stores, Inc. ............................. 760 43,738 ---------- 88,710 ---------- RETAIL (SPECIALTY-APPAREL)--0.3% Gap, Inc. (The) ................................... 670 9,340 ---------- SERVICES (COMMERCIAL & CONSUMER)--0.1% IMS Health, Inc. .................................. 180 3,512 ---------- SERVICES (DATA PROCESSING)--2.2% Automatic Data Processing, Inc. ................... 320 18,848 Concord EFS, Inc. (b) ............................. 220 7,212 First Data Corp. .................................. 600 47,070 ---------- 73,130 ---------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.5% AT&T Wireless Services, Inc.(b) ................... 730 10,490 Sprint Corp. (PCS Group)(b) ....................... 220 5,370 ---------- 15,860 ---------- TELECOMMUNICATIONS (LONG DISTANCE)--1.5% AT&T Corp. ........................................ 1,470 26,666 Sprint Corp. (FON Group) .......................... 1,180 23,694 ---------- 50,360 ---------- TELEPHONE--2.4% ALLTEL Corp. ...................................... 90 5,555 BellSouth Corp. ................................... 520 19,838 Qwest Communications International, Inc. .......... 90 1,272 SBC Communications, Inc. .......................... 440 17,235 Verizon Communications, Inc. ...................... 820 38,917 ---------- 82,817 ---------- TOBACCO--1.4% Philip Morris Cos., Inc. .......................... 1,070 49,060 ---------- TRUCKERS--0.4% United Parcel Service, Inc. Class B ............... 250 13,625 ---------- WASTE MANAGEMENT--0.0% Waste Management, Inc. ............................ 40 1,276 ---------- TOTAL COMMON STOCKS (Identified cost $2,848,090) ............................... 2,958,652 ---------- FOREIGN COMMON STOCKS--8.8% BEVERAGES (ALCOHOLIC)--1.0% Diageo plc (United Kingdom) ....................... 2,950 33,704 ---------- CHEMICALS (SPECIALTY)--0.9% Akzo Nobel NV (Netherlands) ....................... 380 16,968 Syngenta AG (Switzerland)(b) ...................... 260 13,467 ---------- 30,435 ---------- COMMUNICATIONS EQUIPMENT--0.6% Nokia Oyj ADR (Finland) ........................... 810 19,869 Nortel Networks Corp. (Canada)(b) ................. 140 1,050 ---------- 20,919 ---------- SHARES VALUE ------ --------- COMPUTERS (SOFTWARE & SERVICES)--0.1% Check Point Software Technologies Ltd. (Israel)(b) 130 $ 5,186 ---------- ELECTRICAL EQUIPMENT--0.1% Flextronics International Ltd. (Singapore) (b) .... 100 2,399 ---------- ELECTRONICS (SEMICONDUCTORS)--0.1% STMicroelectronics NV (Switzerland) ............... 80 2,534 ---------- FOODS--0.8% Nestle SA Registered Shares Class B (Switzerland) . 126 26,865 ---------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--1.6% Novartis AG Registered Shares (Switzerland) ....... 810 29,272 Sanofi-Synthelabo SA (France) ..................... 360 26,861 ---------- 56,133 ---------- INSURANCE (MULTI-LINE)--0.2% Muenchener Rueckversicherungs-Gesellschaft AG (Germany) ......................................... 20 5,431 ---------- INSURANCE (PROPERTY-CASUALTY)--0.6% XL Capital Ltd. Class A (Bermuda) ................. 230 21,013 ---------- OIL & GAS (REFINING & MARKETING)--0.8% TotalFinaElf SA (France) .......................... 190 27,135 ---------- OIL (INTERNATIONAL INTEGRATED)--0.9% BP plc ADR (United Kingdom) ....................... 700 32,557 ---------- PAPER & FOREST PRODUCTS--0.0% Jefferson Smurfit Group plc (Ireland) ............. 590 1,271 ---------- RAILROADS--0.5% Canadian National Railway Co. (Canada) ............ 355 17,139 ---------- SERVICES (COMMERCIAL & CONSUMER)--0.4% Reuters Group plc ADR (United Kingdom) ............ 210 12,598 ---------- TELECOMMUNICATIONS (LONG DISTANCE)--0.2% BCE, Inc. (Canada) ................................ 250 5,700 ---------- TOTAL FOREIGN COMMON STOCKS (Identified cost $288,525) ................................. 301,019 ---------- TOTAL LONG-TERM INVESTMENTS--95.8% (Identified cost $3,136,615) ............................... 3,259,671 ---------- STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) ----------- ----- SHORT-TERM OBLIGATIONS--12.1% FEDERAL AGENCY SECURITIES--12.1% Freddie Mac 1.49%, 1/2/02 ................. AAA $ 411 410,983 ---------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $410,983) ................................. 410,983 ---------- TOTAL INVESTMENTS--107.9% (Identified cost $3,547,598) ............................... 3,670,654(a) Other assets and liabilities, net--(7.9)% .................. (269,759) ---------- NET ASSETS--100.0% ........................................... $3,400,895 ========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $179,675 and gross depreciation of $56,982 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $3,547,961. (b) Non-income producing. See Notes to Financial Statements 112 PHOENIX-MFS INVESTORS TRUST SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $3,547,598) ... $3,670,654 Cash .......................................................... 27,776 Foreign currency at value (Identified cost $15,377) ........... 15,519 Receivables Receivable from adviser ..................................... 15,490 Fund shares sold ............................................ 6,136 Investment securities sold .................................. 3,633 Dividends ................................................... 2,634 ---------- Total assets .............................................. 3,741,842 ---------- LIABILITIES Payables Investment securities purchased ............................. 309,768 Fund shares repurchased ..................................... 7 Professional fee ............................................ 17,824 Financial agent fee ......................................... 3,215 Trustees' fee ............................................... 1,266 Accrued expenses .............................................. 8,867 ---------- Total liabilities ......................................... 340,947 ---------- NET ASSETS .................................................... $3,400,895 ========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ............ $3,269,013 Undistributed net investment income ......................... 4,228 Accumulated net realized gain ............................... 4,740 Net unrealized appreciation ................................. 122,914 ---------- NET ASSETS .................................................... $3,400,895 ========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ..................................... 326,229 ========== Net asset value and offering price per share $10.42 ====== STATEMENT OF OPERATIONS FROM INCEPTION OCTOBER 29, 2001 TO DECEMBER 31, 2001 INVESTMENT INCOME Dividends ................................................... $ 7,688 Interest .................................................... 1,224 Foreign taxes withheld ...................................... (36) -------- Total investment income ................................... 8,876 -------- EXPENSES Investment advisory fee ..................................... 4,169 Financial agent fee ......................................... 6,631 Professional ................................................ 17,824 Printing .................................................... 6,636 Custodian ................................................... 3,327 Trustees .................................................... 1,266 Miscellaneous ............................................... 968 -------- Total expenses ............................................ 40,821 Less expenses borne by investment adviser ................. (35,527) Custodian fees paid indirectly ............................ (13) -------- Net expenses .............................................. 5,281 -------- NET INVESTMENT INCOME ......................................... 3,595 -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities ............................. 4,740 Net realized gain on foreign currency transactions .......... 633 Net change in unrealized appreciation (depreciation) on investments ............................................... 123,056 Net change in unrealized appreciation (depreciation) on foreign currency and foreign currency transactions ................ (142) -------- NET GAIN ON INVESTMENTS ....................................... 128,287 -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .......... $131,882 ======== See Notes to Financial Statements 113 PHOENIX-MFS INVESTORS TRUST SERIES STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION 10/29/01 TO 12/31/01 ---------- FROM OPERATIONS Net investment income (loss) ................................................. $ 3,595 Net realized gain (loss) ..................................................... 5,373 Net change in unrealized appreciation (depreciation) ......................... 122,914 ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................. 131,882 ---------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (327,032 shares) ............................... 3,277,340 Cost of shares repurchased (803 shares) ...................................... (8,327) ---------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS .................... 3,269,013 ---------- NET INCREASE (DECREASE) IN NET ASSETS ........................................ 3,400,895 NET ASSETS Beginning of period .......................................................... -- ---------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $4,228) $3,400,895 ==========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
FROM INCEPTION 10/29/01 TO 12/31/01 ------------ Net asset value, beginning of period ........................................... $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ................................................. 0.01 Net realized and unrealized gain (loss) ...................................... 0.41 ------ TOTAL FROM INVESTMENT OPERATIONS ........................................... 0.42 ------ CHANGE IN NET ASSET VALUE ...................................................... 0.42 ------ NET ASSET VALUE, END OF PERIOD ................................................. $10.42 ====== Total return ................................................................... 4.25%(3) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ........................................ $3,401 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) ........................................................ 0.95%(2)(4) Net investment income (loss) ................................................. 0.65%(2) Portfolio turnover rate ........................................................ 4%(3) (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 7.34% for the period ended December 31, 2001. (2) Annualized. (3) Not annualized. (4) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 114 PHOENIX-MFS VALUE SERIES INVESTOR PROFILE This series is appropriate for investors seeking capital appreciation and reasonable income. The portfolio seeks undervalued companies that possess high-quality management teams, strong cash flows, healthy balance sheets and an opportunity for improved earnings growth. The portfolio also adheres to a very disciplined approach towards managing risk. This process involves balancing risks at the individual company level, sector level, and at the portfolio level. INVESTMENT ADVISER'S REPORT For the period since inception (October 29, 2001) through December 31, 2001, the portfolio provided a total return of 5.73%. This return, which includes the reinvestment of any distributions but does not reflect any applicable contract or surrender charges, compares to a return of 6.77% over the period for the portfolio's benchmark, the S&P 500(1). This past year has seen a number of unpleasant economic and financial milestones. Among them were a recession -- the first in a decade; a downturn in profits -- the steepest since the 1930s; and a major corporate bankruptcy -- the largest in U.S. history. During the year the markets adjusted to those events and dealt with the effects associated with the September 11th attacks. While this difficult investment environment resulted in two consecutive years of negative returns for U.S. equities, the market's dynamics shifted away from growth to value stocks, creating a more favorable backdrop for the portfolio's consistent value-oriented investment approach. With the exception of the fourth quarter of 2001, where we witnessed a sharp rebound in growth stocks, the past twelve months were marked by a dramatic turnaround in market sentiment. Investors soured on previously favored technology, telecommunications, and media stocks that had reached lofty valuations and fled to more-defensive, value-oriented investments. While the portfolio lagged its Lipper Equity Income category average and the S&P 500 during the period. The portfolio returned 5.73% while the benchmarks returned 7.05% and 6.77%, respectively. It's difficult to determine exactly what caused the portfolio to underperform the average equity income portfolio because it includes such a broad range of competitors, however, the portfolio's performance was hurt primarily by our large exposure to energy and utilities stocks. These stocks came under pressure during the period due to weaker-than-expected demand for energy and uncertainty surrounding commodity prices for oil and natural gas. Other detractors included mixed performance from our holdings in the financial services and health care sectors. On a more positive note, strong stock selection across a broad range of industries and our consistent underweighting in technology stocks contributed favorably to performance during the past year. Despite some weakness in the energy, utilities, and health care sectors throughout the year, our stock selection in these traditionally defensive areas provided a boost to performance versus the S&P 500. In the past three months, oil services companies such as Apache Corporation and Schlumberger performed well. Utility holdings such as National Fuel Gas and Nstar, also provided stable results. In the health care sector, pharmaceuticals company Abbott Labs contributed to performance, as did medical equipment manufacturer Guidant Corporation. Consumer staples stocks, such as Archer Daniels, Procter & Gamble, and Gillette, also help performance. In this uncertain environment, our primary objective remains to try to outperform our benchmarks with lower volatility. Over time, we believe we can achieve this objective by maintaining a consistent focus on inexpensive stocks of high-quality companies with solid or improving balance sheets and cash flows. Through our independent research, we also strive to find companies with management teams that we believe are taking the right steps to improve the value of the company. Most importantly, however, we adhere to a very disciplined approach toward managing risks in the portfolio. This process involves analyzing risks at the company and sector levels by analyzing industry trends and by maintaining a diversified portfolio. OUTLOOK As far as the economy is concerned, the outlook is a bit cloudy right now. Until evidence of a recovery in corporate earnings becomes more compelling, we're likely to maintain our defensive investment strategy. While we think the recession could last several more months, baring any unforeseen crisis, we anticipate a recovery in the second half of the year. That said, we are beginning to concentrate on companies that are likely to benefit once the economy begins to turn around. Accordingly, we think our largest holdings exemplify our conservative approach to stockpicking, our emphasis on high-quality companies with improving business fundamentals, and our confidence in the long-term health of the U.S. economy. (1) The S&P 500 is an unmanaged, commonly used measure of stock market total return performance. The index is not available for direct investment. Returns indicate past performance, which is not predictive of future performance. 115 PHOENIX-MFS VALUE SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE ------ ---------- COMMON STOCKS--88.5% AEROSPACE/DEFENSE--0.3% Northrop Grumman Corp. ........................... 120 $ 12,097 ---------- AGRICULTURAL PRODUCTS--0.7% Archer-Daniels-Midland Co. ....................... 2,430 34,870 ---------- ALUMINUM--2.5% Alcan Inc. ....................................... 850 30,540 Alcoa, Inc. ...................................... 2,470 87,809 ---------- 118,349 ---------- AUTO PARTS & EQUIPMENT--0.9% Delphi Automotive Systems ........................ 2,980 40,707 ---------- BANKS (MAJOR REGIONAL)--5.0% FleetBoston Financial Corp. ...................... 2,440 89,060 Mellon Financial Corp. ........................... 1,700 63,954 PNC Financial Services Group ..................... 840 47,208 SouthTrust Corp. ................................. 1,320 32,564 ---------- 232,786 ---------- BANKS (MONEY CENTER)--1.8% Bank of America Corp. ............................ 1,370 86,242 ---------- BEVERAGES (NON-ALCOHOLIC)--1.3% PepsiCo, Inc. .................................... 1,220 59,402 ---------- BROADCASTING (TELEVISION, RADIO & CABLE)--2.2% Comcast Corp. Class A (b) ........................ 1,470 52,920 Cox Communications, Inc. Class A (b) ............. 1,160 48,616 ---------- 101,536 ---------- CHEMICALS--2.0% Air Products and Chemicals, Inc. ................. 1,340 62,859 Praxair, Inc. .................................... 580 32,045 ---------- 94,904 ---------- CHEMICALS (DIVERSIFIED)--1.2% PPG Industries, Inc. ............................. 1,090 56,375 ---------- COMPUTERS (HARDWARE)--1.7% International Business Machines Corp. ............ 440 53,222 Sun Microsystems, Inc. (b) ....................... 2,030 24,969 ---------- 78,191 ---------- COMPUTERS (SOFTWARE & SERVICES)--0.1% Oracle Corp. (b) ................................. 390 5,386 ---------- ELECTRIC COMPANIES--3.3% Dominion Resources, Inc. ......................... 760 45,676 FirstEnergy Corp. ................................ 670 23,437 FPL Group, Inc. .................................. 280 15,792 NSTAR ............................................ 1,010 45,298 Pinnacle West Capital Corp. ...................... 620 25,947 ---------- 156,150 ---------- ELECTRICAL EQUIPMENT--0.6% Rockwell International Corp. ..................... 1,650 29,469 ---------- ELECTRONICS (INSTRUMENTATION)--0.5% Agilent Technologies, Inc. (b) ................... 870 24,804 ---------- ELECTRONICS (SEMICONDUCTORS)--1.1% Analog Devices, Inc. (b) ......................... 510 22,639 Texas Instruments, Inc. .......................... 1,010 28,280 ---------- 50,919 ---------- SHARES VALUE ------ ---------- ENTERTAINMENT--2.4% Viacom, Inc. Class B (b) ......................... 1,900 $ 83,885 Walt Disney Co. (The) ............................ 1,350 27,972 ---------- 111,857 ---------- FINANCIAL (DIVERSIFIED)--8.4% American Express Co. ............................. 970 34,619 Citigroup, Inc. .................................. 2,990 150,935 Equity Office Properties Trust ................... 800 24,064 Equity Residential Properties Trust .............. 1,850 53,114 Fannie Mae ....................................... 500 39,750 Freddie Mac ...................................... 680 44,472 Morgan Stanley Dean Witter & Co. ................. 850 47,549 ---------- 394,503 ---------- FOODS--1.9% Kellogg Co. ...................................... 1,910 57,491 Smucker (J.M.) Co. (The) ......................... 850 30,073 ---------- 87,564 ---------- HEALTH CARE (DIVERSIFIED)--2.5% Abbott Laboratories .............................. 1,480 82,510 American Home Products Corp. ..................... 590 36,202 ---------- 118,712 ---------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--1.8% Merck & Co., Inc. ................................ 730 42,924 Pfizer, Inc. ..................................... 1,060 42,241 ---------- 85,165 ---------- HEALTH CARE (HOSPITAL MANAGEMENT)--0.4% HCA, Inc. ........................................ 450 17,343 ---------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.0% Guidant Corp. (b) ................................ 910 45,318 ---------- HOUSEHOLD PRODUCTS (NON-DURABLE)--2.7% Kimberly-Clark Corp. ............................. 970 58,006 Procter & Gamble Co. (The) ....................... 870 68,843 ---------- 126,849 ---------- NSURANCE (LIFE/HEALTH)--1.8% Jefferson Pilot Corp. ............................ 1,100 50,897 MetLife, Inc. .................................... 980 31,046 ---------- 81,943 ---------- INSURANCE (MULTI-LINE)--1.2% Hartford Financial Services Group, Inc. (The) .... 860 54,034 ---------- INSURANCE (PROPERTY-CASUALTY)--2.7% Allstate Corp. (The) ............................. 1,840 62,008 Chubb Corp. (The) ................................ 370 25,530 SAFECO Corp. ..................................... 670 20,870 St. Paul Cos., Inc. (The) ........................ 450 19,787 ---------- 128,195 ---------- INVESTMENT BANKING/BROKERAGE--1.1% Merrill Lynch & Co., Inc. ........................ 1,010 52,641 ---------- MACHINERY (DIVERSIFIED)--2.4% Caterpillar, Inc. ................................ 430 22,468 Deere & Co. ...................................... 2,100 91,686 ---------- 114,154 ---------- See Notes to Financial Statements 116 PHOENIX-MFS VALUE SERIES SHARES VALUE ------ ---------- MANUFACTURING (DIVERSIFIED)--2.7% Danaher Corp. .................................... 870 $ 52,470 Minnesota Mining and Manufacturing Co. ........... 620 73,290 ---------- 125,760 ---------- MANUFACTURING (SPECIALIZED)--0.7% Pall Corp. ....................................... 1,360 32,722 ---------- METALS MINING--0.5% Phelps Dodge Corp. (b) ........................... 740 23,976 ---------- NATURAL GAS--3.6% Agl Resources, Inc. .............................. 940 21,639 National Fuel Gas Co. ............................ 2,390 59,033 NICOR, Inc. ...................................... 840 34,978 NiSource, Inc. ................................... 700 16,142 WGL Holdings, Inc. ............................... 1,230 35,756 ---------- 167,548 ---------- OIL--0.2% Occidental Petroleum Corp. ....................... 370 9,816 ---------- OIL & GAS (DRILLING & EQUIPMENT)--2.2% Noble Drilling Corp. (b) ......................... 460 15,658 Schlumberger Ltd. ................................ 1,610 88,470 ---------- 104,128 ---------- OIL & GAS (EXPLORATION & PRODUCTION)--4.4% Anadarko Petroleum Corp. ......................... 1,110 63,103 Apache Corp. ..................................... 1,022 50,977 Devon Energy Corp. ............................... 770 29,761 Unocal Corp. ..................................... 1,740 62,762 ---------- 206,603 ---------- OIL (INTERNATIONAL INTEGRATED)--2.6% Exxon Mobil Corp. ................................ 3,130 123,009 ---------- PAPER & FOREST PRODUCTS--1.3% International Paper Co. .......................... 1,500 60,525 ---------- PERSONAL CARE--0.9% Gilliette Co. (The) .............................. 1,310 43,754 ---------- PUBLISHING (NEWSPAPERS)--2.0% Gannett Co., Inc. ................................ 900 60,507 Tribune Co. ...................................... 900 33,687 ---------- 94,194 ---------- RAILROADS--1.0% Canadian National Railway Co. .................... 1,016 49,052 ---------- RETAIL (GENERAL MERCHANDISE)--2.6% Sears, Roebuck and Co. ........................... 2,520 120,053 ---------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)--1.0% AT&T Wireless Services, Inc. (b) ................. 3,390 48,714 ---------- TELECOMMUNICATIONS (LONG DISTANCE)--3.5% AT&T Corp. ....................................... 3,870 70,202 Sprint Corp. (FON Group) ......................... 4,580 91,966 ---------- 162,168 ---------- TELEPHONE--2.6% BellSouth Corp. .................................. 1,200 45,780 Verizon Communications, Inc. ..................... 1,650 78,309 ---------- 124,089 ---------- SHARES VALUE ------ ---------- TOBACCO--1.2% Philip Morris Cos., Inc. ......................... 1,250 $ 57,313 ---------- TOTAL COMMON STOCKS (Identified cost $3,973,514) ................................ 4,153,889 ---------- FOREIGN COMMON STOCKS--7.2% BEVERAGES (ALCOHOLIC)--0.2% Diageo plc (United Kingdom) ...................... 910 10,397 ---------- CHEMICALS (SPECIALTY)--3.6% Akzo Nobel NV (Netherlands) ...................... 2,120 94,663 Syngenta AG (Switzerland) (b) .................... 1,450 75,107 ---------- 169,770 ---------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--0.9% Novartis AG Registered Shares (Switzerland) ...... 1,200 43,366 ---------- INSURANCE (MULTI-LINE)--0.4% CGNU plc (United Kingdom) ........................ 1,330 16,357 ---------- OIL (INTERNATIONAL INTEGRATED)--2.1% BP plc ADR (United Kingdom) ...................... 1,100 51,161 TotalFinaELF SA ADR (France) (b) ................ 640 44,953 ---------- 96,114 ---------- TOTAL FOREIGN COMMON STOCKS (Identified cost $331,658) .................................. 336,004 ---------- CONVERTIBLE PREFERRED STOCKS--1.6% COMMUNICATIONS EQUIPMENT--0.8% Motorola, Inc. Cv. Pfd. 7% ....................... 780 36,457 ---------- ELECTRIC COMPANIES--0.6% TXU Corp. Cv. Pfd. 8.75% ......................... 530 27,422 ---------- AEROSPACE/DEFENSE--0.2% Northrop Grumman Corp. Cv. Pfd. 7.25% ............ 100 11,140 ---------- TOTAL CONVERTIBLE PREFERRED STOCKS (Identified cost $76,534) ................................... 75,019 ---------- TOTAL LONG-TERM INVESTMENTS--97.3% (Identified cost $4,381,707) ................................ 4,564,912 ---------- STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) ----------- ----- SHORT-TERM OBLIGATIONS--4.7% FEDERAL AGENCY SECURITIES--4.7% Freddie Mac 1.49%, 1/2/02 .................... AAA $221 220,991 ---------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $220,991) .................................. 220,991 ---------- TOTAL INVESTMENTS--102.0% (Identified cost $4,602,697) ................................ 4,785,903(a) Other assets and liabilities, net--(2.0)% ................... (92,998) ---------- NET ASSETS--100.0% ............................................ $4,692,905 ========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $213,882 and gross depreciation of $31,328 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $4,603,349. (b) Non-income producing. See Notes to Financial Statements 117 PHOENIX-MFS VALUE SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $4,602,697) ..... $4,785,903 Receivables Investment securities sold .................................... 25,624 Receivable from adviser ....................................... 14,835 Dividends ..................................................... 5,831 Fund shares sold .............................................. 4,976 ---------- Total assets ................................................ 4,837,169 ---------- LIABILITIES Cash overdraft .................................................. 924 Payables Investment securities repurchased ............................. 108,024 Fund shares repurchased ....................................... 4,793 Professional fee .............................................. 17,824 Printing fee .................................................. 6,623 Financial agent fee ........................................... 3,222 Trustees' fee ................................................. 1,266 Accrued expenses ................................................ 1,588 ---------- Total liabilities ........................................... 144,264 ---------- NET ASSETS ...................................................... $4,692,905 ========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest .............. $4,500,085 Accumulated net realized gain ................................. 9,936 Net unrealized appreciation ................................... 182,884 ---------- NET ASSETS ...................................................... $4,692,905 ========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ......................... 444,665 ========== Net asset value and offering price per share .................... $10.55 ====== STATEMENT OF OPERATIONS FROM INCEPTION OCTOBER 29, 2001 TO DECEMBER 31, 2001 INVESTMENT INCOME Dividends ..................................................... $ 13,261 Interest ...................................................... 1,542 Foreign taxes withheld ........................................ (78) ---------- Total investment income ..................................... 14,725 ---------- EXPENSES Investment advisory fee ....................................... 4,842 Financial agent fee ........................................... 6,654 Professional .................................................. 17,824 Printing ...................................................... 6,637 Custodian ..................................................... 3,318 Trustees ...................................................... 1,266 Miscellaneous ................................................. 968 ---------- Total expenses .............................................. 41,509 Less expenses borne by investment adviser ................... (35,371) Custodian fees paid indirectly .............................. (4) ---------- Net expenses ................................................ 6,134 ---------- NET INVESTMENT INCOME ........................................... 8,591 ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities .............................. 9,765 Net change in unrealized appreciation (depreciation) on investments ............................... 183,206 Net change in unrealized appreciation (depreciation) on foreign currency and foreign currency transactions ............................... (322) ---------- NET GAIN ON INVESTMENTS ......................................... 192,649 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............ $ 201,240 ========== See Notes to Financial Statements 118 PHOENIX-MFS VALUE SERIES STATEMENT OF CHANGES IN NET ASSETS FROM INCEPTION 10/29/01 TO 12/31/01 -------------- FROM OPERATIONS Net investment income (loss) ................................ $ 8,591 Net realized gain (loss) .................................... 9,765 Net change in unrealized appreciation (depreciation) ........ 182,884 ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS . 201,240 ---------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ....................................... (8,371) Net realized short-term gains ............................... (49) ---------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ... (8,420) ---------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (447,287 shares) .............. 4,527,099 Net asset value of shares issued from reinvestment of distributions (798 shares) ................................ 8,420 Cost of shares repurchased (3,420 shares) ................... (35,434) ---------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ... 4,500,085 ---------- NET INCREASE (DECREASE) IN NET ASSETS ....................... 4,692,905 NET ASSETS Beginning of period ......................................... -- ---------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $0) ....................... $4,692,905 ========== FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) FROM INCEPTION 10/29/01 TO 12/31/01 -------------- Net asset value, beginning of period .......................... $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ................................ 0.02 Net realized and unrealized gain (loss) ..................... 0.55 ------ TOTAL FROM INVESTMENT OPERATIONS .......................... 0.57 ------ LESS DISTRIBUTIONS Dividends from net investment income ........................ (0.02) Dividends from net realized gains ........................... --(5) ------ TOTAL DISTRIBUTIONS ....................................... (0.02) ------ CHANGE IN NET ASSET VALUE ..................................... 0.55 ------ NET ASSET VALUE, END OF PERIOD ................................ $10.55 ====== Total return .................................................. 5.73%(3) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ....................... $4,693 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) ....................................... 0.95%(2)(4) Net investment income ....................................... 1.33%(2) Portfolio turnover rate ....................................... 9%(3) (1)If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 6.43% for the period ended December 31, 2001. (2)Annualized. (3)Not annualized. (4)The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (5)Amount is less than $0.01. See Notes to Financial Statements 119 PHOENIX-MORGAN STANLEY FOCUS EQUITY SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking long term capital appreciation by investing primarily in equity securities. INVESTMENT ADVISER'S REPORT The S&P 500 Index(1) rebounded in the fourth quarter of 2001, advancing 10.70%. Despite this strong rebound the index finished its second consecutive year of double digit losses, down 11.87% and the Fund fell 15.08%. This is only the fourth time since the Depression that the equity markets had two consecutive annual losses. All sectors in the index, with the exception of consumer discretionary and materials, which represent only 15% of the index, had negative returns. The declines in the US market occurred against a backdrop of economic weakness, with the longest lasting business expansion in US history ending in March 2001. Corporate earnings in the US are estimated to have declined 16-17%, compared to a growth rate of 17% in 2000. The Fed cut interest rates 11 times and 4.75%, yet monetary and fiscal stimulus did not lead to the business spending that will be necessary for recovery. Technology spending declined last year from the strong levels experienced in advance of Y2K and the introduction of the Euro. The consumer remained relatively strong despite the declining market and increasing unemployment, buoyed to some extent by the ability to refinance and a boom in residential real estate values. Within the large cap universe, both value and growth indices declined, although the Russell 1000 Value Index(2), which fell 5.59% lost less than the Russell 1000 Growth Index(3), which lost 20.42%. The Lipper peer group fell -23.87% and the fund fell -15.08%. The fund lagged the S&P 500 as a result of stock selection. While it is never satisfying to report negative numbers and to lag the primary index, we are pleased with performance relative to the growth universe and other growth managers, as we exceeded both benchmarks for the second year in a row, a period that has been extremely difficult for growth managers. The fund was, on average 5% overweight in technology throughout the year, although we opportunistically increased and decreased exposure throughout the year as a result of valuation work, and these decisions were incrementally positive for performance. Technology was the second worst performing sector of the index and the fund, after utilities. Stock selection in the first quarter lagged the index materially and the fund ended the year behind the index return despite outperformance in both the second and fourth quarters. During the year we increased the emphasis on larger, more established companies dominant in their respective space. These are companies that have longer histories as publicly traded companies, have cash on their balance sheets and have been through prior downturns. Many of these companies tended to act as bellwethers for their respective industries, continued to spend on research and development and many did not make negative preannouncements. Microsoft, the largest technology holding, advanced 53%, gaining $123 billion in market capitalization. Microsoft was helped by resolution of many of the legal issues that had threatened the breakup of the company. Microsoft also made progress in the diversification of its product line through the introduction of Xbox, which appeared in the early running to have supplanted Nintendo for the second place after Sony Playstation. The release of Windows XP, which experienced a good start that should only get stronger as both companies and individuals upgrade. The upgrade will be required as Microsoft will support Windows 2000 only through the end of 2002. We view Microsoft as a company that can consistently earn high single digit/low double digit earnings growth, which is attractive in the current environment. Stock selection in telecomm services, which was less than 5% of the fund, also detracted from performance. Providers such as Verizon and SBC suffered modest declines as growth rates slowed and the companies were forced to delay expenditures and lay off staff. Verizon postponed the IPO for its wireless carrier, the largest in the US, in the weak environment. The majority of the underperformance in this sector can be attributed to positions in Qwest Communications and American Tower. We purchased Qwest in the third quarter feeling that the valuation was quite reasonable and most of the bad news out. The company subsequently reported weaker than expected numbers and expectations and we sold the stock. We also eliminated the communication tower holdings, including American Tower, as the business models for these companies will continue to be slowed by the malaise in the telecomm segment. While we do believe in the growth in wireless traffic, clearly it will take place more slowly than originally anticipated and we do not want this exposure while the economy remains weak and there is no visible catalyst for a recovery for the telecomm providers. Consumer discretionary was a modestly positive sector for the index, and stock selection in the fund, which was roughly market weight in the sector, lagged. We favored discount retailers such as Home Depot, which benefited from a robust housing market and consumer interest in cocooning, which means increased dollars for home spending, after September 11th. Other retail names that performed well were Dollar Tree Stores, Wal-Mart, which recently announced same store sales grew 6% over the holiday season, at the high end of the range, and Costco. The fund lost ground in several of the new media stocks that are in the sector. We owned a small position in Comcast on the strength of the good management team, and favorable financial results. Comcast suffered, as did others, from the weak economy and finally from speculation around the AT&T cable acquisition. We sold Comcast when it was announced they had won the bidding, as there are many uncertainties and risks that come with a large merger, and while we continue to like the name we do no want exposure to those uncertainties. AOL 120 PHOENIX-MORGAN STANLEY FOCUS EQUITY SERIES Time Warner, which was a top ten position in the first half was subsequently reduced to a market weight or below as the weak advertising environment made it increasingly unlikely that the aggressive growth targets the company has set would be met. As well, the company has been hurt by slower than expected subscription growth in the AOL unit. The fund also had a small position in Starwood Hotels, which we sold post September 11th, but detracted value, as well as in Radioshack, which suffered from weak electronics sales and slower than expected digital satellite subscription growth. Being underweight in utilities, which was the worst performing sector in the index and fund, added value to performance relative to the index. Industrials, which were the largest overweight, averaging 19% of the fund, also contributed positively, both from the overweight in a sector that declined less than many others, and from stock selection which modestly exceeded the index sector return. Tyco, which remained the largest holding, was a strong performer. The company exceeded earnings expectations in each quarter, produced over $4 billion in free cash flow and made acquisitions in each of their major divisions, the largest the CIT Financial acquisition, which created a new line of business for the company. Weakness in electronics was made up for by strength in fire and safety protection and healthcare as well as aggressive expense management. The stock came under pressure in the first few trading days of 2001 as SEC Insights, a newsletter, published a report that Tyco might be under SEC investigation since the SEC did not reply to the newsletter request for correspondence regarding Tyco. The SEC subsequently permitted Tyco to publish a letter that indicated there are no ongoing investigations that have not already been disclosed. We continue to believe in the strong earnings prospects for Tyco and feel the stock is reasonably valued, with room for earnings growth and multiple expansion. We built General Dynamics to a top 10 position early in the year, based on its 15% plus earnings growth track record and strong business visibility; we cut the holding back after a strong run up in defense stocks post September 11th and as the company announced there was some likelihood next year's EPS numbers would be reduced. We were buyers of General Dynamics in December. General Electric, another top 10 holding, struggled last year, as a series of negative events hit the company. From the rejection of the Honeywell merger by the EU Commission, to the effects of September 11th, which reached broadly into the company from NBC to GE Financial to aircraft engines, as well as the departure of long-time CEO Jack Welch, the stock struggled. By the end of the year, new CEO Jeff Immelt had announced that the company expects to grow earnings in the 10-11% range in 2002,and that acquisitions across business units are being considered, news that was favorably received. Smaller positions in transaction processors First Data and Concord EFS performed well, as the volume of financial transactions, which drives their revenue, remained positive through the end of the year. Consumer staples, which was roughly market weight, was one of the relatively defensive sectors, losing ground in the fourth quarter when investors favored stocks more levered to economic recovery. Pepsico, which is on track to produce 12-13% earnings growth, was the largest holding in the sector. The Quaker integration appears to be going well and Frito Lay is doing well, comprising the largest share of the company's revenues. Less than 25% of Pepsi's revenues now come from traditional soft drinks, and the company has outpaced Coke in non-carbonated beverages, the fastest growth area in soft drinks. The fund bought Kraft on the initial IPO and subsequently added to the position. We are encouraged by the cost savings and co-branding opportunities being realized from the Nabisco acquisition and the company should benefit from Euro stabilization and lower raw materials costs. Safeway underperformed, and we added to the position on weakness after trimming earlier. The company was hurt by aggressive pricing moves by KMart which were subsequently matched by Wal-Mart. The company has lowered future growth estimates to 14-16% from 16-18%. We continue to believe that Safeway is well-managed and has dominant market share and the ability to weather this temporary price war. The fund was underweight in financials, although the growth financials we favored declined less than the index sector return. We have had exposure to both higher beta and lower beta names, actively managing the exposure based on valuation and the environment. Freddie Mac was the largest holding; although earnings grew in excess of 20% in 2001 and Freddie Mac expects 15% plus growth in 2002, the stock declined modestly. Freddie Mac did perform strongly in the second quarter and post September 11th, when there was a flight to quality financials, but when investors rotated to higher beta financials or out of the group, Freddie Mac was under pressure. As well, investors focus on the prospect of growth eventually slowing and the periodic uncertainty around political risk. We continue to like both the earnings visibility and the modest valuation Freddie has had relative to the broad market. We have trimmed Freddie Mac as a source of funds when moving into technology, but we will maintain a significant stake in the name until the environment becomes more positive. Citigroup, one of the higher beta financials, was also a top ten holding with a positive return for the year. In our view Citigroup is a well diversified global financial conglomerate with disciplined management and a reasonable valuation relative to future earnings growth prospects. There are some short-term negatives, such as the company's reliance on the fragile consumer for earnings and exposure to Enron, however we still regard the company as a high quality growth opportunity. Smaller positions in higher beta names such as Capital One and Goldman Sachs added to performance in the fourth quarter, and we will look to increase our exposure to higher beta names as the signs of economic recovery become more convincing. 121 PHOENIX-MORGAN STANLEY FOCUS EQUITY SERIES OUTLOOK The stock market has recently exhibited a much stronger recovery than the underlying fundamentals of many companies across the market. The run up in cyclical sectors such as technology and consumer discretionary has pushed valuations ahead of business momentum. It is our opinion that economic recovery will not occur until the second half of the year, at the earliest, and we do not see any catalysts to promote a strong and sustainable recovery at this time. We are cautiously optimistic the stock market will have a modest rebound in 2002. If the market were to register another losing year it would be the first time since 1939-41. For these reasons, we continue to hold a mix of stable and cyclical growth companies and spend our time on intense fundamental research. Focus Equity S&P 500 Series Index(1) 12/15/99 $10,000.00 $10,000.00 12/31/99 10,631.10 10,400.00 12/29/00 9,232.45 9,444.51 12/31/01 7,840.36 8,322.99 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 12/15/99 TO 1 YEAR 12/31/01 - ----------------------------------------------------------------------- Focus Equity Series (15.08)% (11.21)% - ----------------------------------------------------------------------- S&P 500 Index(1) (11.87)% (8.58)% - ----------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 12/15/99 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. (1) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance. (2) The Russell 1000 Value Index is unmanaged and measures large-cap value-oriented stock total-return performance and is provided for general comparative purposes. (3) The Russell 1000 Growth Index is unmanaged and measures large-cap growth-oriented stock total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 122 PHOENIX-MORGAN STANLEY FOCUS EQUITY SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE ------ ---------- COMMON STOCKS--98.2% AEROSPACE/DEFENSE--2.4% General Dynamics Corp. ......................... 2,550 $ 203,082 ---------- BEVERAGES (ALCOHOLIC)--3.1% Anheuser-Busch Cos., Inc. ...................... 5,900 266,739 ---------- BEVERAGES (NON-ALCOHOLIC)--2.9% PepsiCo, Inc. .................................. 5,165 251,484 ---------- BIOTECHNOLOGY--2.8% Amgen, Inc. (b) ................................ 2,100 118,524 Gilead Sciences, Inc. (b) ...................... 900 59,148 IDEC Pharmaceuticals Corp. ..................... 850 58,590 ---------- 236,262 ---------- BROADCASTING (TELEVISION, RADIO & CABLE)--1.6% Liberty Media Corp. Class A (b) ................ 9,698 135,772 ---------- COMMUNICATIONS EQUIPMENT--0.7% QUALCOMM, Inc. (b) ............................. 1,200 60,600 ---------- COMPUTERS (HARDWARE)--4.5% Dell Computer Corp. (b) ........................ 4,750 129,105 International Business Machines Corp. .......... 1,900 229,824 Sun Microsystems, Inc. (b) ..................... 2,550 31,365 ---------- 390,294 ---------- COMPUTERS (NETWORKING)--2.8% Cisco Systems, Inc. (b) ........................ 13,100 237,241 ---------- COMPUTERS (SOFTWARE & SERVICES)--6.8% Microsoft Corp. (b) ............................ 6,500 430,625 Oracle Corp. (b) ............................... 6,700 92,527 VERITAS Software Corp. (b) ..................... 1,300 58,279 ---------- 581,431 ---------- CONSUMER FINANCE--0.5% Capital One Financial Corp. .................... 800 43,160 ---------- ELECTRICAL EQUIPMENT--5.5% General Electric Co. ........................... 11,900 476,952 ---------- ELECTRONICS (SEMICONDUCTORS)--6.6% Intel Corp. .................................... 12,600 396,270 Texas Instruments, Inc. ........................ 4,750 133,000 Xilinx, Inc. (b) ............................... 1,050 41,002 ---------- 570,272 ---------- ENTERTAINMENT--2.6% AOL Time Warner, Inc. (b) ...................... 5,250 168,525 Viacom, Inc. Class B (b) ....................... 1,200 52,980 ---------- 221,505 ---------- FINANCIAL (DIVERSIFIED)--8.6% Citigroup, Inc. ................................ 6,683 337,358 Freddie Mac .................................... 6,175 403,845 ---------- 741,203 ---------- FOODS--2.4% Kraft Foods, Inc. Class A ...................... 6,100 207,583 ---------- HEALTH CARE (DIVERSIFIED)--5.2% American Home Products Corp. ................... 4,700 288,392 Johnson & Johnson .............................. 2,750 162,525 ---------- 450,917 ---------- SHARES VALUE ------ ---------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--9.0% Merck & Co., Inc. .............................. 2,650 $155,820 Pfizer, Inc. ................................... 13,750 547,937 Pharmacia Corp. ................................ 1,650 70,373 ---------- 774,130 ---------- HEALTH CARE (HOSPITAL MANAGEMENT)--1.6% HCA, Inc. ...................................... 3,650 140,671 ---------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.4% Medtronic, Inc. (b) ............................ 2,400 122,904 ---------- HEALTH CARE (SPECIALIZED SERVICES)--2.3% Laboratory Corporation of America Holdings (b) . 2,450 198,082 ---------- INSURANCE (MULTI-LINE)--2.3% American International Group, Inc. ............. 2,450 194,530 ---------- INVESTMENT BANKING/BROKERAGE--1.2% Goldman Sachs Group, Inc. (The) ................ 1,150 106,662 ---------- MANUFACTURING (DIVERSIFIED)--8.8% Tyco International Ltd. ........................ 12,900 759,810 ---------- OIL & GAS (DRILLING & EQUIPMENT)--1.0% Baker Hughes, Inc. ............................. 2,350 85,704 ---------- RETAIL (BUILDING SUPPLIES)--3.6% Home Depot, Inc. (The) ......................... 6,050 308,611 ---------- RETAIL (FOOD CHAINS)--1.4% Safeway, Inc. (b) .............................. 2,850 118,988 ---------- RETAIL (GENERAL MERCHANDISE)--3.9% BJ's Wholesale Club, Inc. (b) .................. 2,200 97,020 Wal-Mart Stores, Inc. .......................... 4,200 241,710 ---------- 338,730 ---------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.9% Sprint Corp. (PCS Group) (b) ................... 3,150 76,892 ---------- TELEPHONE--1.8% Verizon Communications, Inc. ................... 3,160 149,974 ---------- TOTAL COMMON STOCKS (Identified cost $8,356,392) .............................. 8,450,185 ---------- TOTAL LONG-TERM INVESTMENTS--98.2% (Identified cost $8,356,392) .............................. 8,450,185 ---------- PAR VALUE (000) ----- SHORT-TERM OBLIGATIONS--3.2% REPURCHASE AGREEMENTS--3.2% State Street Bank & Trust Co. repurchase agreement, 0.25%, dated 12/31/01, due 1/2/02, repurchase price $276,004, collateralized by U.S. Treasury Bond 6.50%, 11/15/26, market value $284,532 .............. $276 276,000 ---------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $276,000) ................................ 276,000 ---------- TOTAL INVESTMENTS--101.4% (Identified cost $8,632,392) .............................. 8,726,185(a) Other assets and liabilities, net--(1.4)% ................. (116,385) ---------- NET ASSETS--100.0% .......................................... $8,609,800 ========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $545,551 and gross depreciation of $1,233,206 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $9,413,840. (b) Non-income producing. See Notes to Financial Statements 123 PHOENIX-MORGAN STANLEY FOCUS EQUITY SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $8,632,392) ..... $ 8,726,185 Cash ............................................................ 116 Receivables Investment securities sold .................................... 186,916 Receivable from adviser ....................................... 18,138 Fund shares sold .............................................. 16,464 Dividends and interest ........................................ 5,067 Prepaid expenses ................................................ 71 ----------- Total assets ................................................ 8,952,957 ----------- LIABILITIES Payables Investment securities purchased ............................... 239,420 Printing fee .................................................. 61,136 Professional fee .............................................. 27,499 Fund shares repurchased ....................................... 6,349 Financial agent fee ........................................... 3,561 Trustees' fee ................................................. 3,262 Miscellaneous fee ............................................. 1,930 ----------- Total liabilities ........................................... 343,157 ----------- NET ASSETS ...................................................... $ 8,609,800 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest .............. $10,767,509 Accumulated net realized loss ................................. (2,251,502) Net unrealized appreciation ................................... 93,793 ----------- NET ASSETS ...................................................... $ 8,609,800 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ......................... 1,099,245 ========== Net asset value and offering price per share .................... $7.83 ===== STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends ..................................................... $ 60,348 Interest ...................................................... 2,855 ----------- Total investment income ..................................... 63,203 ----------- EXPENSES Investment advisory fee ....................................... 68,422 Financial agent fee ........................................... 42,470 Printing ...................................................... 78,657 Professional .................................................. 29,672 Custodian ..................................................... 21,316 Trustees ...................................................... 8,437 Miscellaneous ................................................. 7,407 ----------- Total expenses .............................................. 256,381 Less expenses borne by investment adviser ................... (175,871) Custodian fees paid indirectly .............................. (13) ----------- Net expenses ................................................ 80,497 ----------- NET INVESTMENT LOSS ............................................. (17,294) ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ............................... (1,924,289) Net change in unrealized appreciation (depreciation) on investments .............................................. 596,807 ----------- NET LOSS ON INVESTMENTS ......................................... (1,327,482) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............ $(1,344,776) =========== See Notes to Financial Statements 124 PHOENIX-MORGAN STANLEY FOCUS EQUITY SERIES
STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ----------- ---------- FROM OPERATIONS Net investment income (loss) ................................................. $ (17,294) $ (24,581) Net realized gain (loss) ..................................................... (1,924,289) (327,213) Net change in unrealized appreciation (depreciation) ......................... 596,807 (812,922) ----------- ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................. (1,344,776) (1,164,716) ----------- ---------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ........................................................ -- (879) Net realized short-term gains ................................................ -- (6,824) ----------- ---------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS .................... -- (7,703) ----------- ---------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (563,359 and 317,692 shares, respectively) ..... 4,704,187 3,465,035 Net asset value of shares issued from reinvestment of distributions (0 and 705 shares, respectively) ............................. -- 7,703 Cost of shares repurchased (239,892 and 50,781 shares, respectively) ......... (1,904,735) (547,499) ----------- ---------- NET INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................ 2,799,452 2,925,239 ----------- ---------- INCREASE (DECREASE) IN NET ASSETS ............................................ 1,454,676 1,752,820 NET ASSETS Beginning of period .......................................................... 7,155,124 5,402,304 ----------- ---------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $0 AND $0, RESPECTIVELY) ................................................ $ 8,609,800 $7,155,124 =========== ==========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
YEAR ENDED DECEMBER 31, FROM INCEPTION ----------- 12/15/99 TO 2001 2000 12/31/99 ---- ---- -------- Net asset value, beginning of period ........................................... $ 9.22 $10.63 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ................................................. (0.02)(5) (0.04)(5) -- Net realized and unrealized gain (loss) ...................................... (1.37) (1.36) 0.63 ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ........................................... (1.39) (1.40) 0.63 ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ......................................... -- --(4) -- Dividends from net realized gains ............................................ -- (0.01) -- ------ ------ ------ TOTAL DISTRIBUTIONS ........................................................ -- (0.01) -- ------ ------ ------ CHANGE IN NET ASSET VALUE ...................................................... (1.39) (1.41) 0.63 ------ ------ ------ NET ASSET VALUE, END OF PERIOD ................................................. $ 7.83 $ 9.22 $10.63 ====== ====== ====== Total return ................................................................... (15.08)% (13.16)% 6.31%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) .......................................... $8,610 $7,155 $5,402 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ....................................................... 1.00%(6) 1.00% 1.00%(1) Net investment income (loss) ................................................. (0.21)% (0.34)% 0.39%(1) Portfolio turnover rate ........................................................ 110% 86% 2%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 3.18%, 2.90% and 8.11 % for the periods ended December 31, 2001, 2000 and 1999, respectively. (4) Amount is less than $0.01. (5) Computed using average shares outstanding. (6) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 125 PHOENIX-OAKHURST BALANCED SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking long-term capital appreciation, current income, and conservation of capital from a balanced portfolio of stocks, bonds, and cash equivalents. Investors should note that the portfolio may hold foreign bonds, and foreign investments pose additional risk, such as currency fluctuation, less public disclosure, and political and economic uncertainty. INVESTMENT ADVISER'S REPORT From December 31, 2000 to December 31, 2001, the market represented by the large-cap S&P 500 Index(2) returned a total of -11.87%. It has indeed been a difficult period for equity investors. Late 2000, it became clear that information technology spending was slowing down due to a dramatic buildup of capacity and eroding end-market demand. Stocks had been falling as we entered 2001; however, the slowing economy prompted the Fed to embark on a period of significant easing starting in early January. Stocks rallied initially. But as investors realized the severity of the economic slowdown during the first quarter of 2001, stocks sold off again. The market made a brief rally in April and May, but sold off quickly as evidence of recovery didn't emerge in the later part of the second quarter. The tragic events of September 11th shocked the world and further weakened a fragile economy. Stocks fell precipitously when the market reopened on September 17. It has been a very painful year for equity investors, marked by downward spirals and seesaw changes. During the last quarter of 2001, the market made a dramatic rally off the lows of late September. The S&P 500 rose 10.69% during this time. Investors are betting that economic recovery may be delayed, but not derailed. We agree with this assessment. As evidence of recovery emerges in 2002, we believe the market will climb higher. During periods of economic difficulty, it is understandable that market leaders are those engaged in businesses not severely effected by cyclical weakness. Consumer staple and health-care issues have been the best performers during this 12-month period. On the other hand, stocks of technology, consumer services and telecommunication companies have performed poorly. The portfolio returned 2.60% for the year ended December 31, 2001, very favorable when compared with a return of -3.70% for the Balanced Benchmark Index1. All performance figures assume reinvestment of distributions. The equity portion of the portfolio performed quite well during the past 12 months. With good diversification and stock picking, returns were ahead of the S&P 500 all year. We were overweighted in health-care stocks throughout the year. We were underweighted in cyclical issues during the first quarter of the year, but have increased our weighting throughout the year by trading off consumer staples and energy issues. We believe cyclical stocks will benefit the most as the economy rebounds. The bond portion also performed very well during this period, with higher yielding sectors being among the best performers in the market. We have maintained our strategy of investing in sectors with the best relative values, and while this hurt performance last year, it has benefited results this year. Some of the best contributors to performance were our holdings in the cable and telecommunications industries. OUTLOOK We are positive on stocks at current levels, especially in the near to intermediate term. Low bond yields and low inflation rates support present stock valuations. As the economy recovers during the second half of 2002, earnings are poised to rebound significantly off depressed levels. We believe stock valuations will be maintained going into next year, and stocks will move higher with earnings recovery. We also believe the outlook for the fixed-income markets is very favorable for the long term. Real yields remain attractive by historical standards, and all spread sectors now offer excellent value relative to long-term averages. Our current focus is on Europe to take advantage of inefficiencies we are finding there and using currency hedges to pick up incremental yield. 126 PHOENIX-OAKHURST BALANCED SERIES Lehman Brothers Balanced Balanced Aggregate Benchmark Balanced Benchmark S&P 500 Bond Index Series Index (new)(1) Index(2) Index(3) (old)(4) 5/1/92 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 12/31/92 10,971.70 10,767.30 10,796.00 10,801.20 10,712.00 12/31/93 11,912.40 11,837.80 11,875.60 11,854.40 11,702.50 12/30/94 11,578.90 11,799.30 12,032.70 11,508.70 11,724.90 12/29/95 14,274.20 15,294.70 16,545.90 13,635.30 14,917.40 12/31/96 15,781.80 17,609.70 20,392.40 14,130.30 17,055.80 12/31/97 18,611.70 21,769.40 27,198.50 15,494.30 20,799.80 12/31/98 22,150.50 26,359.60 35,019.90 16,840.20 24,890.60 12/31/99 24,714.20 29,535.70 42,421.40 16,701.30 27,765.90 12/29/00 24,839.80 29,234.40 38,524.10 18,643.00 27,627.30 12/31/01 25,484.90 28,151.50 33,949.40 20,217.20 26,772.30 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 5/1/92 TO 1 YEAR 5 YEAR 12/31/01 - -------------------------------------------------------------------------------- Balanced Series 2.60% 10.06% 10.15% - -------------------------------------------------------------------------------- Balanced Benchmark Index (new)(1) (3.70)% 9.84% 11.29% - -------------------------------------------------------------------------------- S&P 500 Index(2) (11.87)% 10.73% 13.47% - -------------------------------------------------------------------------------- Lehman Brothers Aggregate Bond Index(3) 8.44% 7.43% 7.55% - -------------------------------------------------------------------------------- Balanced Benchmark Index (old)(4) (3.09)% 9.44% 10.71% - -------------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 5/1/92 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. (1) The Balanced Benchmark Index (new) is unmanaged and is calculated based upon the performance of the following indices: 60% S&P 500 Index/40% Lehman Brothers Aggregate Bond Index. This benchmark was changed from the prior year to more accurately reflect the allocation of the Series. (2) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. (3) The Lehman Brothers Aggregate Bond Index is an unmanaged, commonly used measure of bond performance and is provided for general comparative purposes. (4) The Balanced Benchmark Index (old) is unmanaged and is calculated based upon the performance of the following indices: 55% S&P 500 Index/35% Lehman Brothers Aggregate Bond Index/10% U.S. Treasury Bill. The indices are not available for direct investment. 127 PHOENIX-OAKHURST BALANCED SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ U.S. GOVERNMENT SECURITIES--2.5% U.S. TREASURY BONDS--1.2% U.S. Treasury Bonds 5.375%, 2/15/31 ... AAA $3,000 $ 2,957,814 ------------ U.S. TREASURY NOTES--1.3% U.S. Treasury Notes 4.625%, 5/15/06 ... AAA 1,875 1,901,147 U.S. Treasury Notes 3.50%, 11/15/06 ... AAA 750 722,988 U.S. Treasury Notes 5.625%, 5/15/08 ... AAA 234 245,280 U.S. Treasury Notes 5%, 8/15/11 ....... AAA 350 349,125 ------------ 3,218,540 ------------ OTAL U.S. GOVERNMENT SECURITIES (Identified cost $6,164,614) .............................. 6,176,354 ------------ AGENCY MORTGAGE-BACKED SECURITIES--2.6% Fannie Mae 6.50%, 10/1/31 ............. AAA 498 497,961 GNMA 6.50%, 11/15/23 .................. AAA 1,104 1,117,175 GNMA 6.50%, 12/15/23 .................. AAA 323 326,490 GNMA 6.50%, 2/15/24 ................... AAA 1,378 1,394,183 GNMA 6.50%, 6/15/28 ................... AAA 2,854 2,869,648 ------------ TOTAL AGENCY MORTGAGE-BACKED SECURITIES (Identified cost $6,103,309) .............................. 6,205,457 ------------ AGENCY NON MORTGAGE-BACKED SECURITIES--5.9% Fannie Mae 6.50%, 8/15/04 ............. AAA 449 480,358 Fannie Mae 4.375%, 10/15/06 ........... AAA 5,000 4,895,450 Fannie Mae 6.625%, 9/15/09 ............ AAA 4,355 4,651,932 Freddie Mac 6.625%, 9/15/09 ........... AAA 4,000 4,258,380 ------------ TOTAL AGENCY NON MORTGAGE-BACKED SECURITIES (Identified cost $13,680,708) ............................. 14,286,120 ------------ MUNICIPAL BONDS--5.8% CALIFORNIA--2.0% Alameda Corridor Transportation Authority Revenue Taxable Series C 6.60%, 10/1/29 AAA 1,000 984,840 Fresno County Pension Obligation Revenue Taxable 6.21%, 8/15/06 .............. AAA 1,000 1,036,320 Fresno Pension Obligation Taxable 7.80%, 6/1/14 .............................. AAA 1,000 1,137,300 Kern County Pension Obligation Revenue Taxable 7.26%, 8/15/14 .............. AAA 420 457,090 Long Beach Pension Obligation Taxable 6.87%, 9/1/06 ....................... AAA 230 244,626 San Bernardino County Pension Obligation Revenue Taxable 6.87%, 8/1/08 ....... AAA 110 117,004 Sonoma County Pension Obligation Revenue Taxable 6.625%, 6/1/13 .............. AAA 495 516,107 Ventura County Pension Obligation Taxable 6.54%, 11/1/05 ...................... AAA 260 276,455 ------------ 4,769,742 ------------ FLORIDA--0.8% Miami Beach Special Obligation Revenue Taxable 8.60%, 9/1/21 ............... AAA 875 953,374 Tampa Solid Waste System Revenue Taxable Series A 6.33%, 10/1/06 ............. AAA 700 728,063 University of Miami Exchangeable Revenue Taxable Series A 7.65%, 4/1/20 (e) .. AAA 270 279,274 ------------ 1,960,711 ------------ NEW JERSEY--0.4% New Jersey Sports & Exposition Authority Revenue Taxable Series A 6.75%, 3/1/10 AAA 1,000 1,041,290 ------------ STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ NEW YORK--0.9% New York State Dormitory Authority Pension Obligation Revenue Taxable 6.90%, 4/1/03 AA- $ 650 $ 671,196 New York State Taxable Series C 6.35%, 3/1/07 .............................. AAA 1,500 1,544,550 ------------ 2,215,746 ------------ OREGON--0.3% Multnomah County Pension Obligation Revenue Taxable 7.20%, 6/1/10 ....... Aaa(d) 100 107,098 Portland Pension Revenue Taxable Series C 7.32%, 6/1/08 ....................... Aaa(d) 555 596,653 ------------ 703,751 ------------ PENNSYLVANIA--1.0% Philadelphia Authority For Industrial Development Pension Funding Retirement Systems Revenue Taxable Series A 5.79%, 4/15/09 ............................. AAA 1,100 1,091,981 Pittsburgh Pension Obligation Taxable Series C 6.50%, 3/1/17 .............. AAA 1,250 1,258,750 ------------ 2,350,731 ------------ TEXAS--0.4% Dallas-Fort Worth International Airport Revenue Taxable 6.40%, 11/1/07 ...... AAA 1,000 1,035,690 ------------ TOTAL MUNICIPAL BONDS (Identified cost $13,501,992) ............................. 14,077,661 ------------ ASSET BACKED SECURITIES--1.3% AESOP Funding II LLC 97-1A, A2 6.40%, 10/20/03 ............................ AAA 1,200 1,226,268 Premier Auto Trust 98-3, B 6.14%, 9/8/04 AAA 500 505,477 WFS Financial Owner Trust 00-D, A3 6.83%, 7/20/05 ............................. AAA 1,330 1,377,900 ------------ TOTAL ASSET BACKED SECURITIES (Identified cost $3,058,706) 3,109,645 ------------ CORPORATE BONDS--4.5% AIRLINES--0.7% American Airlines, Inc. 01-2, A-2 144A 7.858%, 10/1/11 (c) ................. AA+ 1,000 1,002,380 Northwest Airlines Corp. 00-1 G 8.072%, 10/1/19 ............................. AAA 639 658,138 ------------ 1,660,518 ------------ BANKS (MAJOR REGIONAL)--0.2% U.S. Bank of Minnesota N.A. 6.30%, 7/15/08 A 500 505,772 ------------ BANKS (MONEY CENTER)--0.2% Wachovia Corp. 5.625%, 12/15/08 ....... A- 500 485,925 ------------ BROADCASTING (TELEVISION, RADIO & CABLE)--0.4% Comcast Cable Communications, Inc. 7.125%, 6/15/13 ..................... BBB 500 513,467 CSC Holdings, Inc. 7.625%, 7/15/18 .... BB+ 500 476,133 ------------ 989,600 ------------ COMPUTERS (SOFTWARE & SERVICES)--0.2% Computer Associates International, Inc. Series B 6.375%, 4/15/05 ............ BBB+ 535 537,395 ------------ DISTRIBUTORS (FOOD & HEALTH)--0.2% AmerisourceBergen Corp. 144A 8.125%, 9/1/08 (c) .......................... BB- 500 515,000 ------------ See Notes to Financial Statements 128 PHOENIX-OAKHURST BALANCED SERIES STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ GAMING, LOTTERY & PARI-MUTUEL COMPANIES--0.3% MGM Mirage, Inc. 9.75%, 6/1/07 ........ BB+ $ 100 $ 104,750 Park Place Entertainment Corp. 9.375%, 2/15/07 ............................. BB+ 500 523,750 ------------ 628,500 ------------ HEALTH CARE (SPECIALIZED SERVICES)--0.2% HEALTHSOUTH Corp. 10.75%, 10/1/08 ..... BB+ 500 552,500 ------------ INSURANCE (MULTI-LINE)--0.2% Willis Corroon Corp. 9%, 2/1/09 ....... B+ 410 428,450 ------------ IRON & STEEL--0.2% Allegheny Technologies 144A 8.375%, 12/15/11 (c) ........................ BBB+ 500 489,949 ------------ OIL & GAS (EXPLORATION & PRODUCTION)--0.1% Hanover Equipment Trust 144A 8.50%, 9/1/08 (c) .......................... BB 185 193,325 ------------ PUBLISHING (NEWSPAPERS)--0.2% Hollinger International Publishing, Inc. 9.25%, 3/15/07 ............................. B+ 625 622,656 ------------ RETAIL (SPECIALTY)--0.2% Amerigas Partners Eagle Finance Corp. 144A 8.875%, 5/20/11 (c) ................. BB+ 500 517,500 ------------ SHIPPING--0.1% Teekay Shipping Corp. 8.32%, 2/1/08 ... BB+ 230 238,050 ------------ TELECOMMUNICATIONS (LONG DISTANCE)--0.3% WorldCom, Inc. 7.50%, 5/15/11 ......... BBB+ 650 668,639 ------------ TELEPHONE--0.7% Century Telephone Enterprises, Inc. Series F 6.30%, 1/15/08 ...................... BBB+ 500 484,395 Qwest Communications International, Inc. 7.50%, 11/1/08 ...................... BBB+ 1,100 1,112,258 ------------ 1,596,653 ------------ TRUCKS & PARTS--0.1% Cummins Engine, Inc. 6.45%, 3/1/05 .... BBB 200 194,939 ------------ TOTAL CORPORATE BONDS (Identified cost $10,710,831) ............................. 10,825,371 ------------ NON-AGENCY MORTGAGE-BACKED SECURITIES--8.3% CS First Boston Mortgage Securities Corp. 97-C2, B 6.72%, 1/17/07 ............. Aa1(d) 2,000 2,054,066 DLJ Commercial Mortgage Corp. 98-CF2, A1B 6.24%, 11/12/31 ..................... Aaa(d) 2,500 2,513,967 DLJ Commercial Mortgage Corp. 99-CG1, A1B 6.46%, 1/10/09 ...................... Aaa(d) 500 507,957 DLJ Mortgage Acceptance Corp. 96-CF1, A1B 7.58%, 2/12/06 ...................... AAA 1,400 1,466,998 First Union - Lehman Brothers Commercial Mortgage 97-C1, B 7.43%, 4/18/07 .... Aa2(d) 930 990,471 First Union Commercial Mortgage Trust 99-C1, A2 6.07%, 10/15/08 ........... AAA 2,000 2,008,438 G.E. Capital Mortgage Services, Inc. 96-8, 1M 7.25%, 5/25/26 ...................... AA 213 213,502 JP Morgan Chase Commercial Mortgage Securities Corp. 01-CIBC, A3 6.26%, 3/15/33 ............................. AAA 2,250 2,281,641 LB Commercial Conduit Mortgage Trust 98-C4, A1B 6.21%, 10/15/08 .......... AAA 2,500 2,542,624 Lehman Large Loan 97-LLI, B 6.95%, 3/12/07 ............................ AA+ 825 866,880 Nationslink Funding Corp. 96-1, B 7.69%, 12/20/05 ............................ AA 450 471,445 STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ NON-AGENCY MORTGAGE-BACKED SECURITIES--CONTINUED Residential Funding Mortgage Securities I 96-S1, A11 7.10%, 1/25/26 ........... AAA $ 881 $ 897,832 Residential Funding Mortgage Securities I 96-S4, M1 7.25%, 2/25/26 ............ AAA 733 734,410 Residential Funding Mortgage Securities I 96-S8, A4 6.75%, 3/25/11 ............ AAA 468 482,141 Washington Mutual Bank 99-WM3, 2A5 7.50%, 11/19/29 ..................... Aaa(d) 2,000 2,091,660 ------------ TOTAL NON-AGENCY MORTGAGE-BACKED SECURITIES (Identified cost $19,542,109) ............................. 20,124,032 ------------ FOREIGN GOVERNMENT SECURITIES--4.4% CHILE--0.5% Republic of Chile 6.875%, 4/28/09 ..... A- 1,125 1,139,332 ------------ COLOMBIA--0.2% Republic of Colombia 9.75%, 4/9/11 .... BBB 485 507,700 ------------ CROATIA--0.2% Croatia Series A 4.563%, 7/31/10 (e) .. BBB- 507 500,296 ------------ EL SALVADOR--0.5% Republic of El Salvador 144A 9.50%, 8/15/06 (c) ......................... BB+ 1,200 1,314,000 ------------ MEXICO--1.5% United Mexican States Global Bond 8.125%, 12/30/19 ............................ BB+ 2,750 2,678,500 United Mexican States Series MTN 8.30%, 8/15/31 ............................. BB+ 1,000 985,000 ------------ 3,663,500 ------------ POLAND--1.2% Republic of Poland Series PDIB 6%, 10/27/14 (e) ........................ BBB+ 2,950 2,933,605 ------------ URUGUAY--0.3% Oriental Republic of Uruguay 7.875%, 7/15/27 ............................. BBB- 750 705,000 ------------ TOTAL FOREIGN GOVERNMENT SECURITIES (Identified cost $10,083,994) ............................. 10,763,433 ------------ FOREIGN CORPORATE BONDS--1.8% CANADA--0.2% Bowater Canada Finance 144A 7.95%, 11/15/11 (c) ........................ BBB 500 512,547 ------------ CAYMAN ISLANDS--0.8% Pemex Finance Ltd. 7.33%, 5/15/12 ..... AAA 1,000 1,055,600 Petrobras International Finance 144A 9.75%, 7/6/11 (c) Baa(d) 1,000 990,000 ------------ 2,045,600 ------------ CHILE--0.2% Empresa Nacional de Electricidad SA Series B 8.50%, 4/1/09 ....................... BBB+ 120 122,962 Petropower I Funding Trust 144A 7.36%, 2/15/14 (c) ......................... BBB 302 278,417 ------------ 401,379 ------------ MEXICO--0.2% Telefonos de Mexico SA 8.25%, 1/26/06 . BB+ 500 525,625 ------------ NETHERLANDS--0.4% HSBC Capital Funding LP 144A 9.547%, 12/31/49 (c) ........................ A- 750 867,999 ------------ TOTAL FOREIGN CORPORATE BONDS (Identified cost $4,162,135) .............................. 4,353,150 ------------ See Notes to Financial Statements 129 PHOENIX-OAKHURST BALANCED SERIES SHARES VALUE ------ ---------- COMMON STOCKS--56.5% AEROSPACE/DEFENSE--1.3% General Dynamics Corp. ......................... 26,500 $ 2,110,460 Northrop Grumman Corp. ......................... 9,700 977,857 ------------ 3,088,317 ------------ AIR FREIGHT--0.6% FedEx Corp. (b) ................................ 27,600 1,431,888 ------------ BANKS (MAJOR REGIONAL)--2.4% FleetBoston Financial Corp. .................... 86,000 3,139,000 Wells Fargo & Co. .............................. 59,900 2,602,655 ------------ 5,741,655 ------------ BANKS (MONEY CENTER)--1.7% Bank of America Corp. .......................... 67,500 4,249,125 ------------ BEVERAGES (NON-ALCOHOLIC)--2.2% PepsiCo, Inc. .................................. 110,300 5,370,507 ------------ BROADCASTING (TELEVISION, RADIO & CABLE)--1.6% Clear Channel Communications, Inc. (b) ......... 56,800 2,891,688 Liberty Media Corp. Class A (b) ................ 66,500 931,000 ------------ 3,822,688 ------------ CHEMICALS--0.5% Dow Chemical Co. (The) ......................... 38,900 1,314,042 ------------ COMMUNICATIONS EQUIPMENT--0.9% ADTRAN, Inc. (b) ............................... 29,300 747,736 American Tower Corp. Class A (b) ............... 44,700 423,309 Harris Corp. ................................... 30,100 918,351 ------------ 2,089,396 ------------ COMPUTERS (HARDWARE)--1.5% International Business Machines Corp. .......... 29,900 3,616,704 ------------ COMPUTERS (NETWORKING)--1.0% Cisco Systems, Inc. (b) ........................ 134,800 2,441,228 ------------ COMPUTERS (PERIPHERALS)--0.3% Maxtor Corp. (b) ............................... 118,300 750,022 ------------ COMPUTERS (SOFTWARE & SERVICES)--3.5% Computer Associates International, Inc. ........ 59,300 2,045,257 Microsoft Corp. (b) ............................ 97,600 6,466,000 ------------ 8,511,257 ------------ DISTRIBUTORS (FOOD & HEALTH)--2.3% Cardinal Health, Inc. .......................... 23,325 1,508,194 McKesson Corp. ................................. 109,000 4,076,600 Performance Food Group Co. (b) ................. 4,000 140,680 ------------ 5,725,474 ------------ ELECTRICAL EQUIPMENT--2.4% General Electric Co. ........................... 147,000 5,891,760 ------------ ELECTRONICS (SEMICONDUCTORS)--1.7% Altera Corp. (b) ............................... 56,600 1,201,052 Fairchild Semiconductor Corp. Class A (b) ...... 41,100 1,159,020 Intel Corp. .................................... 28,500 896,325 Micron Technology, Inc. (b) .................... 25,200 781,200 ------------ 4,037,597 ------------ ENTERTAINMENT--1.6% AOL Time Warner, Inc. (b) ...................... 41,300 1,325,730 Viacom, Inc. Class B (b) ....................... 56,200 2,481,230 ------------ 3,806,960 ------------ SHARES VALUE ------ ---------- EQUIPMENT (SEMICONDUCTORS)--1.8% Applied Materials, Inc. (b) .................... 33,600 $ 1,347,360 Credence Systems Corp. (b) ..................... 23,000 427,110 Lam Research Corp. (b) ......................... 63,600 1,476,792 Novellus Systems, Inc. (b) ..................... 12,000 473,400 Teradyne, Inc. (b) ............................. 21,700 654,038 ------------ 4,378,700 ------------ FINANCIAL (DIVERSIFIED)--5.4% Citigroup, Inc. ................................ 118,300 5,971,784 Freddie Mac .................................... 37,200 2,432,880 J.P. Morgan Chase & Co. ........................ 40,600 1,475,810 Morgan Stanley Dean Witter & Co. ............... 56,600 3,166,204 ------------ 13,046,678 ------------ FOODS--0.5% Dean Foods Co. ................................. 17,392 1,186,162 ------------ HEALTH CARE (DIVERSIFIED)--0.8% Bristol-Myers Squibb Co. ....................... 37,300 1,902,300 ------------ HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--1.7% Pfizer, Inc. ................................... 101,800 4,056,730 ------------ HEALTH CARE (GENERIC AND OTHER)--0.8% King Pharmaceuticals, Inc. (b) ................. 45,066 1,898,631 ------------ HEALTH CARE (HOSPITAL MANAGEMENT)--0.3% HCA, Inc. ...................................... 19,600 755,384 ------------ HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.5% Bard (C.R.), Inc. .............................. 32,400 2,089,800 Beckman Coulter, Inc. .......................... 15,600 691,080 Guidant Corp. (b) .............................. 17,800 886,440 ------------ 3,667,320 ------------ HEALTH CARE (SPECIALIZED SERVICES)--0.6% Omnicare, Inc. ................................. 63,100 1,569,928 ------------ INSURANCE (MULTI-LINE)--1.8% American International Group, Inc. ............. 55,800 4,430,520 ------------ MANUFACTURING (DIVERSIFIED)--2.5% Tyco International Ltd. ........................ 102,474 6,035,719 ------------ OFFICE EQUIPMENT & SUPPLIES--0.3% Miller (Herman), Inc. .......................... 33,000 780,780 ------------ OIL--0.3% Conoco, Inc. ................................... 29,300 829,190 ------------ OIL & GAS (DRILLING & EQUIPMENT)--0.8% Baker Hughes, Inc. ............................. 14,200 517,874 Schlumberger Ltd. .............................. 7,400 406,630 Tidewater, Inc. ................................ 17,600 596,640 Transocean Sedco Forex, Inc. ................... 10,200 344,964 ------------ 1,866,108 ------------ OIL & GAS (EXPLORATION & PRODUCTION)--0.6% Anadarko Petroleum Corp. ....................... 11,900 676,515 Unocal Corp. ................................... 20,800 750,256 ------------ 1,426,771 ------------ OIL (INTERNATIONAL INTEGRATED)--1.1% ChevronTexaco Corp. ............................ 10,600 949,866 Exxon Mobil Corp. .............................. 43,200 1,697,760 ------------ 2,647,626 ------------ PAPER & FOREST PRODUCTS--0.3% International Paper Co. ........................ 20,500 827,175 ------------ See Notes to Financial Statements 130 PHOENIX-OAKHURST BALANCED SERIES SHARES VALUE ------ ---------- RETAIL (COMPUTERS & ELECTRONICS)--0.6% Tech Data Corp. (b) 36,400 $ 1,575,392 ------------ RETAIL (DRUG STORES)--0.5% Caremark Rx, Inc. (b) .......................... 70,400 1,148,224 ------------ RETAIL (GENERAL MERCHANDISE)--1.5% Wal-Mart Stores, Inc. .......................... 61,600 3,545,080 ------------ SAVINGS & LOAN COMPANIES--0.4% Golden State Bancorp, Inc. ..................... 36,300 949,245 ------------ SERVICES (ADVERTISING/MARKETING)--0.9% Lamar Advertising Co. (b) ...................... 50,200 2,125,468 ------------ SERVICES (COMMERCIAL & CONSUMER)--1.3% Cendant Corp. (b) .............................. 112,300 2,202,203 Crown Castle International Corp. (b) ........... 93,600 999,648 ------------ 3,201,851 ------------ SERVICES (DATA PROCESSING)--1.9% BISYS Group, Inc. (The) (b) .................... 27,200 1,740,528 Fiserv, Inc. (b) ............................... 68,850 2,913,732 ------------ 4,654,260 ------------ TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.3% Nextel Communications, Inc. Class A (b) ........ 59,500 652,120 ------------ TELEPHONE--1.3% SBC Communications, Inc. ....................... 51,400 2,013,338 Verizon Communications, Inc. ................... 24,000 1,139,040 ------------ 3,152,378 ------------ TEXTILES (APPAREL)--0.6% Jones Apparel Group, Inc. (b) .................. 16,600 550,622 Liz Claiborne, Inc. ............................ 17,600 875,600 ------------ 1,426,222 ------------ TRUCKERS--0.6% United Parcel Service, Inc. Class B ............ 27,300 1,487,850 ------------ TOTAL COMMON STOCKS (Identified cost $111,275,343) ............................ 137,112,432 ------------ FOREIGN COMMON STOCKS--0.9% COMMUNICATIONS EQUIPMENT--0.3% Nokia Oyj ADR (Finland) ........................ 28,000 686,840 ------------ HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--0.6% Elan Corp. plc ADR (Ireland) (b) ............... 34,100 1,536,546 ------------ TOTAL FOREIGN COMMON STOCKS (Identified cost $1,755,598) .............................. 2,223,386 ------------ UNIT INVESTMENT TRUSTS--0.3% SPDR Trust Series I ............................ 5,700 652,308 ------------ TOTAL UNIT INVESTMENT TRUSTS (Identified cost $746,864) ................................ 652,308 ------------ TOTAL LONG-TERM INVESTMENTS--94.8% (Identified cost $200,786,203) ............................ 229,909,349 ------------ STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ SHORT-TERM OBLIGATIONS--4.8% COMMERCIAL PAPER--3.9% Goldman Sachs Group, Inc. 1.75%, 1/2/02 A-1+ $3,650 $ 3,649,823 Lexington Parker Capital Co. LLC 1.95%, 1/9/02 .............................. A-1 2,058 2,057,108 Park Avenue Receivables 2.05%, 1/15/02 A-1 2,180 2,178,262 Receivables Capital Corp. 2.05%, 1/25/02 A-1+ 1,573 1,570,850 ------------ 9,456,043 ------------ FEDERAL AGENCY SECURITIES--0.9% Freddie Mac 1.80%, 1/9/02 ............. AAA 2,240 2,239,104 ------------ TOTAL SHORT-TERM OBLIGATIONS (Identified cost $11,695,147) ............................. 11,695,147 ------------ TOTAL INVESTMENTS--99.6% (Identified cost $212,481,350) ............................ 241,604,496(a) Other assets and liabilities, net--0.4% ................... 1,036,185 ------------ NET ASSETS--100.0% .......................................... $242,640,681 ============ (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $35,588,384 and gross depreciation of $6,523,670 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $212,539,782. (b) Non-income producing. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2001, these securities amounted to a value of $6,681,117 or 2.8% of net assets. (d) As rated by Moody's, Fitch or Duff & Phelps. (e) Variable or step coupon security; interest rate shown reflects the rate currently in effect. See Notes to Financial Statements 131 PHOENIX-OAKHURST BALANCED SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $212,481,350) ... $241,604,496 Cash ............................................................ 16,848 Receivables Interest and dividends ........................................ 1,379,808 Fund shares sold .............................................. 86,657 Investment securities sold .................................... 5,465 Prepaid expenses ................................................ 2,120 ------------ Total assets ................................................ 243,095,394 ------------ LIABILITIES Payables Fund shares repurchased ....................................... 207,852 Investment advisory fee ....................................... 111,986 Printing fee .................................................. 74,908 Professional fee .............................................. 25,191 Financial agent fee ........................................... 17,968 Trustees' fee ................................................. 3,262 Accrued expenses ................................................ 13,546 ------------ Total liabilities ........................................... 454,713 ------------ NET ASSETS ...................................................... $242,640,681 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest .............. $216,961,239 Undistributed net investment income ........................... 535,974 Accumulated net realized loss ................................. (3,979,678) Net unrealized appreciation ................................... 29,123,146 ------------ NET ASSETS ...................................................... $242,640,681 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ......................... 19,669,938 ============ Net asset value and offering price per share .................... $12.34 ====== STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Interest ...................................................... $ 6,876,459 Dividends ..................................................... 1,355,085 Foreign taxes withheld ........................................ (69) ----------- Total investment income ..................................... 8,231,475 ----------- EXPENSES Investment advisory fee ....................................... 1,347,718 Financial agent fee ........................................... 220,168 Printing ...................................................... 89,699 Custodian ..................................................... 49,965 Professional .................................................. 27,446 Trustees ...................................................... 8,437 Miscellaneous ................................................. 19,193 ----------- Total expenses .............................................. 1,762,626 Less expenses borne by investment adviser ................... (44,562) Custodian fees paid indirectly .............................. (1,938) ----------- Net expenses ................................................ 1,716,126 ----------- NET INVESTMENT INCOME ........................................... 6,515,349 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ............................... (1,533,884) Net change in unrealized appreciation (depreciation) on investments ............................... 976,208 ----------- NET LOSS ON INVESTMENTS ......................................... (557,676) ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............ $ 5,957,673 =========== See Notes to Financial Statements 132 PHOENIX-OAKHURST BALANCED SERIES
STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ----------- ---------- FROM OPERATIONS Net investment income (loss) ................................................. $ 6,515,349 $ 7,672,098 Net realized gain (loss) ..................................................... (1,533,884) 26,638,478 Net change in unrealized appreciation (depreciation) ......................... 976,208 (32,991,071) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................. 5,957,673 1,319,505 ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ........................................................ (6,487,362) (7,392,570) Net realized short-term gains ................................................ (3,347,460) (1,340,985) Net realized long-term gains ................................................. (1,521,676) (26,117,374) ------------ ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS .................... (11,356,498) (34,850,929) ------------ ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (3,151,392 and 1,987,944 shares, respectively) . 38,944,984 28,345,836 Net asset value of shares issued from reinvestment of distributions (929,801 and 2,675,907 shares, respectively) ............................... 11,356,498 34,850,929 Cost of shares repurchased (4,481,095 and 4,951,311 shares, respectively) .... (55,166,888) (70,675,852) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS .................... (4,865,406) (7,479,087) ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ........................................ (10,264,231) (41,010,511) NET ASSETS Beginning of period .......................................................... 252,904,912 293,915,423 ------------ ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $535,974 AND $546,879, RESPECTIVELY) ....................................... $242,640,681 $252,904,912 ============ ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) YEAR ENDED DECEMBER 31, ----------------------------------------------------------------- 2001(4) 2000 1999 1998 1997 -------- -------- -------- -------- -------- Net asset value, beginning of period ........................... $12.60 $14.44 $13.74 $12.26 $12.06 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ................................. 0.33(3) 0.41 0.34 0.33 0.38 Net realized and unrealized gain (loss) ...................... (0.01) (0.33) 1.22 1.94 1.73 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ........................... 0.32 0.08 1.56 2.27 2.11 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ......................... (0.33) (0.40) (0.34) (0.32) (0.40) Dividends from net realized gains ............................ (0.25) (1.52) (0.52) (0.47) (1.51) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS ........................................ (0.58) (1.92) (0.86) (0.79) (1.91) ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ...................................... (0.26) (1.84) 0.70 1.48 0.20 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD .................................. $12.34 $12.60 $14.44 $13.74 $12.26 ====== ====== ====== ====== ====== Total return ................................................... 2.60% 0.51% 11.57% 19.01% 17.93% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) .......................... $242,641 $252,905 $293,915 $280,056 $231,180 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) ........................................ 0.70%(2) 0.70% 0.70% 0.68% 0.71% Net investment income ........................................ 2.66% 2.84% 2.43% 2.58% 2.92% Portfolio turnover rate ........................................ 45% 56% 61% 110% 181% (1)If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.72% for the period ended December 31, 2001. (2)The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (3)Computed using average shares outstanding. (4)As required, effective January 1, 2001 the Fund has adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities and including paydown gains and losses in interest income. The effect of this change for the year ended December 31, 2001 was to decrease the ratio of net investment income to average net assets from 2.69% to 2.66%. There was no effect to net investment income per share and net realized and unrealized gain (loss) per share. Per share ratios and supplemental data for prior periods have not been restated to reflect this change.
See Notes to Financial Statements 133 PHOENIX-OAKHURST GROWTH AND INCOME SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking dividend growth, current income and capital appreciation. INVESTMENT ADVISER'S REPORT Major stock market indices fell for a second year in a row. The Dow Jones Industrial Average(2) fell 5.42%, the S&P 500(1) fell 11.87% and the Nasdaq 100 Index(3) fell 20.80%. The Nasdaq fell more sharply due to deteriorating business conditions in its technology components. The one bright spot in the stock market was the small-cap sector. Small-cap stocks, represented by the Russell 2000 Index(4), rose 2.63%. A weak economy, falling corporate earnings, record bankruptcy filings and the September 11th terrorist attacks adversely affected stock prices. The National Bureau of Economic Research declared that a recession officially began in the U.S. in March of 2001. Overly optimistic business projections by companies resulted in excess investment in technology infrastructure. When demand for goods and services failed to meet supply, businesses cut back on capital spending and fired workers. Banks and the capital markets tightened their lending standards and cut off all but their most creditworthy customers from much needed cash. This resulted in a record number of bankruptcies in 2001. The most notable bankruptcy was Enron Corporation, which was the largest in U.S. history. Excess manufacturing capacity remains a problem with utilization rates at only 75%, the lowest levels since 1983. Despite all these problems, the housing market was strong, and auto sales reached record levels due to 0% financing incentives. Due to the economic weakness the Federal Open Market Committee began lowering interest rates in January. By the time the year was over, the Fed had lowered the target rate on Federal Funds 11 times. The target rate started the year at 6.5% and finished the year at 1.75%, the lowest level in 40 years. The event that will be remembered and forever change our lives is the September 11th terrorist attacks on the World Trade Center in New York and the Pentagon in Washington D.C. Bio-terrorism was introduced to this country in the form of the anthrax bacteria being sent through our postal system. These events will have a permanent impact on our national security, the way we travel, send mail and other aspects of our daily lives. In this difficult environment, the portfolio performed well, beating the S&P 500 Index, with a return of -8.17% for the year versus the -11.87% return of the Index Successful sector allocation was the primary driver of our excess return. The portfolio had a lower percentage of its assets invested in the S&P 500 technology stocks whose earnings were most adversely affected by the cutbacks in capital spending. The portfolio also benefited from strong performance in its defense holdings. L-3 Communications, Northrop Grumman and General Dynamics all rose on expectations of higher defense spending to fight terrorism. The portfolio also had some good individual stock picks. Ultramar Diamond Shamrock rose sharply on a buyout announcement from Valero Energy. Strong spending on consumer electronics helped Best Buy. International Game Technology rose on a string of greater-than-expected earnings, contributions to expected earnings from its merger with Anchor Gaming and state budget deficits causing some states to investigate initiating legalized gambling. Michaels Stores had a good year due to strong sales of home decorations and craft products. The portfolio was adversely affected by an overweight position in the utility sector. Warmer-than-average winter temperatures and the recession lowered electricity demand and caused electricity and natural gas prices to trend sharply downward. This and the Enron bankruptcy gave utilities the dubious distinction of being the worst performing sector in the U.S. equity market. OUTLOOK Most economists expect the economy and corporate earnings to improve in the second half of 2002. Low interest rates, lower income tax rates, strong money supply growth, lower energy prices, lower mortgage interest payments and a possible government stimulus package are all expected to help lead the U.S. economy out of the recession. Recent economic data have shown an improvement in consumer confidence, durable goods orders and leading indicators. This information causes us to be hopeful for positive stock market returns in 2002. The portfolio is well diversified and positioned for a rising equity market. Currently we are seeing attractive historical valuations in the pharmaceutical, wireless telecommunications and utility industries. 134 PHOENIX-OAKHURST GROWTH AND INCOME SERIES Growth and Income S&P 500 Series Index(1) 3/2/98 $10,000.00 $10,000.00 12/31/98 12,045.30 11,895.30 12/31/99 14,093.30 14,409.40 12/29/00 13,161.90 13,085.60 12/31/01 12,087.10 11,531.70 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 3/2/98 TO 1 YEAR 12/31/01 - ---------------------------------------------------------------------------- Growth and Income Series (8.17)% 5.07% - ---------------------------------------------------------------------------- S&P 500 Index(1) (11.87)% 3.79% - ---------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 3/2/98 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. (1) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance. The index is not available for direct investment. (2) The Dow Jones Industrial Average is unmanaged and measures large cap stock total return performance and is provided for general comparative purposes. (3) The Nasdaq 100 Index is unmanaged and measures technology oriented stock total return performance and is provided for general comparative purposes. (4) The Russell 2000 Index is an unmanaged, commonly used measure of small capitalization stock total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 135 PHOENIX-OAKHURST GROWTH AND INCOME SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE ------ ------------ COMMON STOCKS--94.9% AEROSPACE/DEFENSE--1.1% Boeing Co. (The) ............................... 20,000 $ 775,600 General Dynamics Corp. ......................... 3,700 294,668 Northrop Grumman Corp. ......................... 2,500 252,025 ------------ 1,322,293 ------------ ALUMINUM--0.4% Alcoa, Inc. .................................... 11,700 415,935 ------------ AUTOMOBILES--0.3% Ford Motor Co. ................................. 22,600 355,272 ------------ BANKS (MAJOR REGIONAL)--2.4% Bank of New York Co., Inc. (The) ............... 2,300 93,840 Comerica, Inc. ................................. 8,800 504,240 FleetBoston Financial Corp. .................... 26,700 974,550 SunTrust Banks, Inc. ........................... 6,700 420,090 U.S. Bancorp ................................... 16,800 351,624 Zions Bancorporation ........................... 8,000 420,640 ------------ 2,764,984 ------------ BANKS (MONEY CENTER)--1.7% Bank of America Corp. .......................... 24,100 1,517,095 Wachovia Corp. ................................. 12,500 392,000 ------------ 1,909,095 ------------ BANKS (REGIONAL)--0.2% United Bankshares, Inc. ........................ 8,800 253,968 ------------ BEVERAGES (NON-ALCOHOLIC)--1.5% Coca-Cola Co. (The) ............................ 9,600 452,640 Pepsi Bottling Group, Inc. (The) ............... 6,200 145,700 PepsiCo, Inc. .................................. 24,300 1,183,167 ------------ 1,781,507 ------------ BIOTECHNOLOGY--0.3% Amgen, Inc. (b) ................................ 6,200 349,928 ------------ BROADCASTING (TELEVISION, RADIO & CABLE)--0.4% Clear Channel Communications, Inc. (b) ......... 3,900 198,549 EchoStar Communications Corp. Class A (b) ...... 8,000 219,760 ------------ 418,309 ------------ CHEMICALS--0.6% Dow Chemical Co. (The) ......................... 8,600 290,508 Du Pont (E.I.) de Nemours & Co. ................ 8,800 374,088 ------------ 664,596 ------------ COMMUNICATIONS EQUIPMENT--1.7% Comverse Technology, Inc. (b) .................. 13,700 306,469 Corning, Inc. .................................. 2,300 20,516 Harris Corp. ................................... 12,900 393,579 JDS Uniphase Corp. (b) ......................... 5,600 48,608 L-3 Communications Holdings, Inc. (b) .......... 4,800 432,000 Motorola, Inc. ................................. 18,600 279,372 QUALCOMM, Inc. (b) ............................. 9,000 454,500 Tellabs, Inc. (b) .............................. 2,300 34,408 ------------ 1,969,452 ------------ COMPUTERS (HARDWARE)--3.3% Apple Computer, Inc. (b) ....................... 10,100 221,190 Dell Computer Corp. (b) ........................ 27,600 750,168 Hewlett-Packard Co. ............................ 24,600 505,284 International Business Machines Corp. .......... 17,000 2,056,320 Sun Microsystems, Inc. (b) ..................... 26,900 330,870 ------------ 3,863,832 ------------ COMPUTERS (NETWORKING)--1.0% Cisco Systems, Inc. (b) ........................ 66,900 1,211,559 ------------ SHARES VALUE ------ ------------ COMPUTERS (PERIPHERALS)--0.3% EMC Corp. (b) .................................. 28,200 $ 379,008 ------------ COMPUTERS (SOFTWARE & SERVICES)--5.1% Adobe Systems, Inc. ............................ 7,700 239,085 Computer Associates International, Inc. ........ 17,100 589,779 Microsoft Corp. (b) ............................ 56,400 3,736,500 Oracle Corp. (b) ............................... 51,000 704,310 PeopleSoft, Inc. (b) ........................... 3,500 140,700 Siebel Systems, Inc. (b) ....................... 3,500 97,930 VeriSign, Inc. (b) ............................. 4,800 182,592 VERITAS Software Corp. (b) ..................... 4,400 197,252 ------------ 5,888,148 ------------ CONSUMER FINANCE--0.5% MBNA Corp. ..................................... 11,400 401,280 PMI Group, Inc. (The) .......................... 3,100 207,731 ------------ 609,011 ------------ DISTRIBUTORS (FOOD & HEALTH)--1.0% Cardinal Health, Inc. .......................... 4,100 265,106 McKesson Corp. ................................. 6,000 224,400 Performance Food Group Co. (b) ................. 4,100 144,197 SYSCO Corp. .................................... 21,300 558,486 ------------ 1,192,189 ------------ ELECTRIC COMPANIES--4.0% Dominion Resources, Inc. ....................... 5,500 330,550 DTE Energy Co. ................................. 7,100 297,774 Duke Energy Corp. .............................. 8,300 325,858 Energy East Corp. .............................. 26,000 493,740 Entergy Corp. .................................. 14,800 578,828 Mirant Corp. (b) ............................... 14,200 227,484 PPL Corp. ...................................... 9,400 327,590 Progress Energy, Inc. .......................... 10,900 490,827 Reliant Energy, Inc. ........................... 20,300 538,356 TXU Corp. ...................................... 8,300 391,345 UtiliCorp United, Inc. ......................... 25,900 651,903 ------------ 4,654,255 ------------ ELECTRICAL EQUIPMENT--3.9% General Electric Co. ........................... 101,500 4,068,120 Sanmina Corp. (b) .............................. 5,700 113,430 Solectron Corp. (b) ............................ 14,100 159,048 Vishay Intertechnology, Inc. (b) ............... 7,500 146,250 ------------ 4,486,848 ------------ ELECTRONICS (SEMICONDUCTORS)--2.7% Advanced Micro Devices, Inc. (b) ............... 5,000 79,300 Analog Devices, Inc. (b) ....................... 4,700 208,633 Intel Corp. .................................... 66,400 2,088,280 Micron Technology, Inc. (b) .................... 5,600 173,600 PMC-Sierra, Inc. (b) ........................... 5,200 110,552 Texas Instruments, Inc. ........................ 17,100 478,800 ------------ 3,139,165 ------------ ENGINEERING & CONSTRUCTION--0.2% Shaw Group, Inc. (The) (b) ..................... 9,200 216,200 ------------ ENTERTAINMENT--2.5% AOL Time Warner, Inc. (b) ...................... 52,700 1,691,670 Viacom, Inc. Class B (b) ....................... 18,800 830,020 Walt Disney Co. (The) .......................... 20,500 424,760 ------------ 2,946,450 ------------ EQUIPMENT (SEMICONDUCTORS)--1.0% Applied Materials, Inc. (b) .................... 10,300 413,030 KLA-Tencor Corp. (b) ........................... 6,900 341,964 Lam Research Corp. (b) ......................... 8,700 202,014 See Notes to Financial Statements 136 PHOENIX-OAKHURST GROWTH AND INCOME SERIES SHARES VALUE ------ ------------ EQUIPMENT (SEMICONDUCTORS)--CONTINUED Novellus Systems, Inc. (b) ..................... 5,800 $ 228,810 ------------ 1,185,818 ------------ FINANCIAL (DIVERSIFIED)--11.7% Ambac Financial Group, Inc. .................... 7,000 405,020 American Express Co. ........................... 13,100 467,539 Citigroup, Inc. ................................ 64,000 3,230,720 Fannie Mae ..................................... 10,600 842,700 Freddie Mac .................................... 7,400 483,960 J.P. Morgan Chase & Co. ........................ 40,400 1,468,540 Morgan Stanley Dean Witter & Co. ............... 24,400 1,364,936 SPDR Trust Series I ............................ 45,800 5,241,352 ------------ 13,504,767 ------------ FOODS--1.0% General Mills, Inc. ............................ 6,200 322,462 Hershey Foods Corp. ............................ 3,900 264,030 Kellogg Co. .................................... 6,400 192,640 McCormick & Co., Inc. .......................... 8,800 369,336 ------------ 1,148,468 ------------ GAMING, LOTTERY & PARI-MUTUEL COMPANIES--0.1% MGM Mirage, Inc. (b) ........................... 4,100 118,367 ------------ HARDWARE & TOOLS--0.2% Stanley Works (The) ............................ 5,400 251,478 ------------ HEALTH CARE (DIVERSIFIED)--4.6% Abbott Laboratories ............................ 15,200 847,400 American Home Products Corp. ................... 13,300 816,088 Bristol-Myers Squibb Co. ....................... 22,600 1,152,600 Johnson & Johnson .............................. 43,400 2,564,940 ------------ 5,381,028 ------------ HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--5.5% Forest Laboratories, Inc. (b) .................. 4,900 401,555 Lilly (Eli) & Co. .............................. 10,700 840,378 Merck & Co., Inc. .............................. 23,000 1,352,400 Pfizer, Inc. ................................... 67,100 2,673,935 Pharmacia Corp. ................................ 9,200 392,380 Schering-Plough Corp. .......................... 19,300 691,133 ------------ 6,351,781 ------------ HEALTH CARE (GENERIC AND OTHER)--0.3% Medicis Pharmaceutical Corp. Class A (b) ....... 5,600 361,704 ------------ HEALTH CARE (MANAGED CARE)--2.0% CIGNA Corp. .................................... 5,000 463,250 Oxford Health Plans, Inc. (b) .................. 17,400 524,436 UnitedHealth Group, Inc. ....................... 9,900 700,623 WellPoint Health Networks, Inc. (b) ............ 4,900 572,565 ------------ 2,260,874 ------------ HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--0.9% Beckman Coulter, Inc. .......................... 6,300 279,090 Medtronic, Inc. (b) ............................ 15,500 793,755 ------------ 1,072,845 ------------ HOUSEHOLD PRODUCTS (NON-DURABLE)--1.9% Clorox Co. (The) ............................... 7,600 300,580 Colgate-Palmolive Co. .......................... 2,300 132,825 Kimberly-Clark Corp. ........................... 9,300 556,140 Procter & Gamble Co. (The) ..................... 15,100 1,194,863 ------------ 2,184,408 ------------ HOUSEWARES--0.3% Tupperware Corp. ............................... 16,400 315,700 ------------ INSURANCE (LIFE/HEALTH)--0.9% Lincoln National Corp. ......................... 15,500 752,835 MetLife, Inc. .................................. 8,000 253,440 ------------ 1,006,275 ------------ SHARES VALUE ------ ------------ INSURANCE (MULTI-LINE)--1.9% American International Group, Inc. 27,700 $ 2,199,380 ------------ INSURANCE (PROPERTY-CASUALTY)--0.3% MGIC Investment Corp. .......................... 3,000 185,160 Radian Group, Inc. ............................. 3,900 167,505 ------------ 352,665 ------------ INSURANCE BROKERS--0.2% Gallagher (Arthur J.) & Co. .................... 7,700 265,573 ------------ INVESTMENT BANKING/BROKERAGE--1.0% Goldman Sachs Group, Inc. (The) ................ 2,200 204,050 Lehman Brothers Holdings, Inc. ................. 5,500 367,400 Merrill Lynch & Co., Inc. ...................... 10,800 562,896 ------------ 1,134,346 ------------ LEISURE TIME (PRODUCTS)--0.1% Callaway Golf Co. .............................. 8,000 153,200 ------------ LODGING - HOTELS--0.3% Carnival Corp. ................................. 7,500 210,600 Starwood Hotels & Resorts Worldwide, Inc. ...... 5,900 176,115 ------------ 386,715 ------------ MANUFACTURING (DIVERSIFIED)--2.9% Honeywell International, Inc. .................. 11,600 392,312 ITT Industries, Inc. ........................... 3,700 186,850 Johnson Controls, Inc. ......................... 2,900 234,175 Minnesota Mining and Manufacturing Co. ......... 3,900 461,019 Tyco International Ltd. ........................ 24,100 1,419,490 United Technologies Corp. ...................... 10,300 665,689 ------------ 3,359,535 ------------ NATURAL GAS--1.3% Equitable Resources, Inc. ...................... 8,500 289,595 NICOR, Inc. .................................... 6,900 287,316 Sempra Energy .................................. 31,300 768,415 Williams Cos., Inc. (The) ...................... 5,200 132,704 ------------ 1,478,030 ------------ OIL--1.2% Amerada Hess Corp. ............................. 2,500 156,250 Conoco, Inc. ................................... 8,700 246,210 Occidental Petroleum Corp. ..................... 37,400 992,222 ------------ 1,394,682 ------------ OIL & GAS (DRILLING & EQUIPMENT)--0.2% Schlumberger Ltd. .............................. 1,800 98,910 Smith International, Inc. (b) .................. 3,200 171,584 ------------ 270,494 ------------ OIL & GAS (EXPLORATION & PRODUCTION)--0.5% Unocal Corp. ................................... 16,200 584,334 ------------ OIL (INTERNATIONAL INTEGRATED)--3.5% ChevronTexaco Corp. ............................ 15,300 1,371,033 Exxon Mobil Corp. .............................. 67,400 2,648,820 ------------ 4,019,853 ------------ PAPER & FOREST PRODUCTS--0.3% International Paper Co. ........................ 6,200 250,170 Weyerhaeuser Co. ............................... 900 48,672 ------------ 298,842 ------------ PERSONAL CARE--0.4% Alberto-Culver Co. Class B ..................... 5,100 228,174 Estee Lauder Cos., Inc. (The) Class A .......... 6,600 211,596 ------------ 439,770 ------------ POWER PRODUCERS (INDEPENDENT)--0.2% Calpine Corp. (b) .............................. 12,200 204,838 ------------ See Notes to Financial Statements 137 PHOENIX-OAKHURST GROWTH AND INCOME SERIES SHARES VALUE ------ ------------ RAILROADS--0.4% Union Pacific Corp. ............................ 7,800 $ 444,600 ------------ RETAIL (BUILDING SUPPLIES)--1.1% Home Depot, Inc. (The) ......................... 18,500 943,685 Lowe's Cos., Inc. .............................. 7,000 324,870 ------------ 1,268,555 ------------ RETAIL (COMPUTERS & ELECTRONICS)--0.7% Best Buy Co., Inc. (b) ......................... 5,000 372,400 RadioShack Corp. ............................... 5,100 153,510 Tech Data Corp. (b) ............................ 7,600 328,928 ------------ 854,838 ------------ RETAIL (DEPARTMENT STORES)--0.8% Federated Department Stores, Inc. (b) .......... 7,900 323,110 May Department Stores Co. (The) ................ 9,100 336,518 Neiman Marcus Group, Inc. (The) Class A ........ 7,200 223,704 ------------ 883,332 ------------ RETAIL (FOOD CHAINS)--0.2% Safeway, Inc. (b) .............................. 6,100 254,675 ------------ RETAIL (GENERAL MERCHANDISE)--2.6% BJ's Wholesale Club, Inc. (b) .................. 3,500 154,350 Costco Wholesale Corp. (b) ..................... 5,600 248,528 Sears, Roebuck and Co. ......................... 8,000 381,120 Target Corp. ................................... 9,100 373,555 Wal-Mart Stores, Inc. .......................... 32,300 1,858,865 ------------ 3,016,418 ------------ RETAIL (SPECIALTY)--0.6% Foot Locker, Inc. .............................. 13,700 214,405 Michaels Stores, Inc. (b) ...................... 8,600 283,370 Tiffany & Co. .................................. 3,700 116,439 Zale Corp. (b) ................................. 2,600 108,888 ------------ 723,102 ------------ RETAIL (SPECIALTY-APPAREL)--0.1% Gap, Inc. (The) ................................ 8,600 119,884 ------------ SAVINGS & LOAN COMPANIES--0.3% Astoria Financial Corp. ........................ 12,000 317,520 ------------ SERVICES (ADVERTISING/MARKETING)--0.3% Interpublic Group of Cos., Inc. (The) .......... 6,700 197,918 Omnicom Group, Inc. ............................ 1,400 125,090 ------------ 323,008 ------------ SERVICES (COMPUTER SYSTEMS)--0.6% Electronic Data Systems Corp. .................. 9,800 671,790 ------------ SERVICES (DATA PROCESSING)--0.4% First Data Corp. ............................... 6,000 470,700 ------------ SHIPPING--0.1% Teekay Shipping Corp. .......................... 4,400 153,340 ------------ TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.8% AT&T Wireless Services, Inc. (b) ............... 26,200 376,494 Nextel Communications, Inc. Class A (b) ........ 20,200 221,392 Nextel Partners, Inc. Class A (b) .............. 5,000 60,000 Sprint Corp. (PCS Group) (b) ................... 10,200 248,982 ------------ 906,868 ------------ TELECOMMUNICATIONS (LONG DISTANCE)--0.9% AT&T Corp. ..................................... 21,600 391,824 Sprint Corp. (FON Group) ....................... 9,600 192,768 WorldCom, Inc. - WorldCom Group (b) ............ 31,100 437,888 ------------ 1,022,480 ------------ SHARES VALUE ------ ---------- TELEPHONE--3.0% BellSouth Corp. ................................ 31,000 $ 1,182,650 SBC Communications, Inc. ....................... 28,100 1,100,677 Verizon Communications, Inc. ................... 26,100 1,238,706 ------------ 3,522,033 ------------ TEXTILES (APPAREL)--0.9% Jones Apparel Group, Inc. (b) .................. 10,100 335,017 Liz Claiborne, Inc. ............................ 4,500 223,875 Polo Ralph Lauren Corp. (b) .................... 6,600 176,616 Tommy Hilfiger Corp. (b) ....................... 18,600 255,750 ------------ 991,258 ------------ TOBACCO--1.3% Philip Morris Cos., Inc. ....................... 31,600 1,448,860 ------------ TOTAL COMMON STOCKS (Identified cost $108,594,041) ............................ 109,871,035 ------------ FOREIGN COMMON STOCKS--2.1% AIRLINES--0.0% British Airways (United Kingdom) ............... 1,900 54,530 ------------ AUTO PARTS & EQUIPMENT--0.2% Magna International, Inc. Class A (Canada) ..... 4,100 260,227 ------------ COMMUNICATIONS EQUIPMENT--0.2% Nortel Networks Corp. (Canada) (b) ............. 26,600 199,500 ------------ COMPUTERS (SOFTWARE & SERVICES)--0.2% Check Point Software Technologies Ltd. (Israel) (b) ................................. 4,400 175,516 ------------ ELECTRICAL EQUIPMENT--0.2% Flextronics International Ltd. (Singapore) (b) . 7,200 172,728 ------------ FOODS--0.4% Unilever NV NY Registered Shares (Netherlands) . 8,900 512,729 ------------ HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--0.1% Elan Corp. (Ireland) (b) ....................... 3,600 162,216 ------------ OIL (INTERNATIONAL INTEGRATED)--0.8% Royal Dutch Petroleum Co. NY Registered Shares (Netherlands) ................................ 18,700 916,674 ------------ TOTAL FOREIGN COMMON STOCKS (Identified cost $3,487,419) .............................. 2,454,120 ------------ TOTAL LONG-TERM INVESTMENTS--97.0% (Identified cost $112,081,460) ............................ 112,325,155 ------------ STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) ----------- ----- SHORT-TERM OBLIGATIONS--3.3% COMMERCIAL PAPER--3.3% Donnelley (R.R.) & Sons Co. 1.70%, 1/2/02 ....................... A-1 $ 940 939,956 Govco, Inc. 1.75%, 1/2/02 ............. A-1+ 2,800 2,799,864 ------------ 3,739,820 ------------ TOTAL SHORT-TERM OBLIGATIONS (Identified cost $3,739,820) .............................. 3,739,820 ------------ TOTAL INVESTMENTS--100.3% (Identified cost $115,821,280) ............................ 116,064,975(a) Other assets and liabilities, net--(0.3)% ................. (324,556) ------------ NET ASSETS--100.0% .......................................... $115,740,419 ============ (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $13,341,025 and gross depreciation of $13,701,553 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $116,425,503. (b) Non-income producing. See Notes to Financial Statements 138 PHOENIX-OAKHURST GROWTH AND INCOME SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $115,821,280) ... $116,064,975 Receivables Investment securities sold .................................... 872,003 Dividends and interest ........................................ 143,537 Fund shares sold .............................................. 120,087 Prepaid expenses ................................................ 1,017 ------------ Total assets ................................................ 117,201,619 ------------ LIABILITIES Cash overdraft .................................................. 3,029 Payables Investment securities purchased ............................... 1,275,824 Fund shares repurchased ....................................... 24,673 Investment advisory fee ....................................... 61,494 Printing fee .................................................. 53,306 Professional fee .............................................. 24,536 Financial agent fee ........................................... 10,480 Trustees' fee ................................................. 3,262 Accrued expenses ................................................ 4,596 ------------ Total liabilities ........................................... 1,461,200 ------------ NET ASSETS ...................................................... $115,740,419 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest .............. $119,496,802 Undistributed net investment income ........................... 172,435 Accumulated net realized loss ................................. (4,172,513) Net unrealized appreciation ................................... 243,695 ------------ NET ASSETS ...................................................... $115,740,419 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ......................... 10,135,676 ============ Net asset value and offering price per share .................... $11.42 ====== STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends ..................................................... $ 1,625,097 Interest ...................................................... 89,536 Foreign taxes withheld ........................................ (7,008) ------------ Total investment income ..................................... 1,707,625 ------------ EXPENSES Investment advisory fee ....................................... 795,378 Financial agent fee ........................................... 128,370 Printing ...................................................... 64,182 Custodian ..................................................... 28,836 Professional .................................................. 26,854 Trustees ...................................................... 8,438 Miscellaneous ................................................. 7,746 ------------ Total expenses .............................................. 1,059,804 Less expenses borne by investment adviser ................... (93,832) Custodian fees paid indirectly .............................. (158) ------------ Net expenses ................................................ 965,814 ------------ NET INVESTMENT INCOME ........................................... 741,811 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ............................... (3,857,903) Net change in unrealized appreciation (depreciation) on investments ............................... (6,712,958) ------------ NET LOSS ON INVESTMENTS ......................................... (10,570,861) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............ $ (9,829,050) ============ See Notes to Financial Statements 139 PHOENIX-OAKHURST GROWTH AND INCOME SERIES STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ---------- ---------- FROM OPERATIONS Net investment income (loss) ............................................................... $ 741,811 $ 591,291 Net realized gain (loss) ................................................................... (3,857,903) 443,082 Net change in unrealized appreciation (depreciation) ....................................... (6,712,958) (8,725,436) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................... (9,829,050) (7,691,063) ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ...................................................................... (580,441) (580,226) Net realized long-term gains (265,628) (440,268) ------------ ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS .................................. (846,069) (1,020,494) ------------ ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (3,808,993 and 3,891,857 shares, respectively) .............. 44,476,346 51,992,942 Net asset value of shares issued from reinvestment of distributions (71,582 and 79,917 shares, respectively) ................................................................... 846,069 1,020,494 Cost of shares repurchased (2,726,595 and 2,515,199 shares, respectively) ................. (31,396,116) (33,646,384) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................. 13,926,299 19,367,052 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ..................................................... 3,251,180 10,655,495 NET ASSETS Beginning of period ....................................................................... 112,489,239 101,833,744 ------------ ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $172,435 AND $11,065, RESPECTIVELY) ........................................................................... $115,740,419 $112,489,239 ============ ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) YEAR ENDED FROM DECEMBER 31, INCEPTION ------------------------------------ 3/2/98 TO 2001 2000 1999 12/31/98 -------- -------- -------- --------- Net asset value, beginning of period ................................. $12.52 $13.53 $11.99 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ....................................... 0.08 0.07 0.07 0.05 Net realized and unrealized gain (loss) ............................ (1.09) (0.96) 1.97 1.99 ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .................................. (1.01) (0.89) 2.04 2.04 ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ............................... (0.06) (0.07) (0.07) (0.05) Dividends from net realized gains .................................. (0.03) (0.05) (0.16) -- Tax return of capital .............................................. -- -- (0.27) -- ------ ------ ------ ------ TOTAL DISTRIBUTIONS ............................................... (0.09) (0.12) (0.50) (0.05) ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ............................................ (1.10) (1.01) 1.54 1.99 ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ....................................... $11.42 $12.52 $13.53 $11.99 ====== ====== ====== ====== Total return .......................................................... (8.17)% (6.61)% 17.00% 20.45%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ................................ $115,740 $112,489 $101,834 $41,860 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ............................................. 0.85%(4) 0.85% 0.85% 0.85%(1) Net investment income .............................................. 0.65% 0.54% 0.71% 1.02%(1) Portfolio turnover rate .............................................. 29% 53% 52% 81%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.93%, 0.94%, 1.01% and 1.46% for the periods ended December 31, 2001, 2000, 1999 and 1998, respectively. (4) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 140 PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking as high a level of total rate of return over an extended period of time as is considered consistent with prudent investment risk. INVESTMENT ADVISER'S REPORT From December 31, 2000 to December 31, 2001, the market represented by the large-cap S&P 500 Index(2) returned a total of -11.87%. It has indeed been a difficult period for equity investors. Late 2000, it became clear that information technology spending was slowing down due to a dramatic buildup of capacity and eroding end-market demand. Stocks had been falling as we entered 2001; however, the slowing economy prompted the Fed to embark on a period of significant easing starting in early January. Stocks rallied initially. But as investors realized the severity of the economic slowdown during the first quarter of 2001, stocks sold off again. The market made a brief rally in April and May, but sold off quickly as evidence of recovery didn't emerge in the later part of the second quarter. The tragic events of September 11th shocked the world and further weakened a fragile economy. Stocks fell precipitously when the market reopened on September 17. It has been a very painful year for equity investors, marked by downward spirals and seesaw changes. During the last quarter of 2001, the market made a dramatic rally off the lows of late September. The S&P 500 rose 10.69% during this time. Investors are betting that economic recovery may be delayed, but not derailed. We agree with this assessment. As evidence of recovery emerges in 2002, we believe the market will climb higher. During periods of economy difficulty, it is understandable that market leaders are those engaged in businesses not severely effected by cyclical weakness. Consumer staple and health-care issues have been the best performers during this 12-month period. On the other hand, stocks of technology, consumer services and telecommunication companies have performed poorly. The Phoenix-Oakhurst Strategic Allocation Series returned 1.87% for the year ended December 31, 2001, very favorable when compared with a return of - -3.70% for the Balanced Benchmark Index(1). All performance figures assume reinvestment of distributions and exclude the effect of sales charges. The equity portion of the portfolio performed quite well during the past 12 months. With good diversification and stock picking, returns were ahead of the S&P 500 all year. We were overweighted in health-care stocks throughout the year. We were underweighted in cyclical issues during the first quarter of the year, but have increased our weighting throughout the year by trading off consumer staples and energy issues. We believe cyclical stocks will benefit the most as the economy rebounds. The bond portion also performed very well during this period, with higher yielding sectors being among the best performers in the market. We have maintained our strategy of investing in sectors with the best relative values, and while this hurt performance last year, it has benefited results this year. Some of the best contributors to performance were our holdings in the cable and telecommunications industries. OUTLOOK We are positive on stocks at current levels, especially in the near to intermediate term. Low bond yields and low inflation rates support present stock valuations. As the economy recovers during the second half of 2002, earnings are poised to rebound significantly off depressed levels. We believe stock valuations will be maintained going into next year, and stocks will move higher with earnings recovery. We also believe the outlook for the fixed-income markets is very favorable for the long term. Real yields remain attractive by historical standards, and all spread sectors now offer excellent value relative to long-term averages. Our current focus is on Europe to take advantage of inefficiencies we are finding there and using currency hedges to pick up incremental yield. 141 PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES Lehman Strategic Balanced Brothers Balanced Allocation Benchmark S&P 500 Aggregate Benchmark Series Index (new)(1) Index(2) Bond Index(3) (old)(4) 12/31/91 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 12/31/92 11,066.90 10,762.70 10,769.10 10,740.00 10,723.40 12/31/93 12,287.00 11,832.70 11,846.00 11,787.30 11,714.90 12/30/94 12,109.30 11,794.30 12,002.70 11,443.50 11,737.40 12/29/95 14,315.80 15,288.10 16,504.60 13,558.10 14,933.30 12/31/96 15,610.90 17,602.20 20,341.50 14,050.30 17,073.90 12/31/97 18,846.70 21,760.00 27,130.70 15,406.60 20,821.90 12/31/98 22,765.60 26,348.30 34,932.50 16,744.90 24,917.00 12/31/99 25,329.40 29,523.00 42,315.50 16,606.80 27,795.40 12/29/00 25,476.30 29,221.90 38,427.90 18,537.50 27,656.60 12/31/01 25,952.40 28,139.40 33,864.70 20,102.70 26,800.80 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 1 YEAR 5 YEARS 10 YEARS - ---------------------------------------------------------------------------- Strategic Allocation Series 1.87% 10.70% 10.01% - ---------------------------------------------------------------------------- Balanced Benchmark Index (new)(1) (3.70)% 9.84% 10.90% - ---------------------------------------------------------------------------- S&P 500 Index(2) (11.87)% 10.73% 12.97% - ---------------------------------------------------------------------------- Lehman Brothers Aggregate Bond Index(3) 8.44% 7.43% 7.23% - ---------------------------------------------------------------------------- Balanced Benchmark Index (old)(4) (3.09)% 9.44% 10.36% - ---------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 12/31/91. Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. High yield fixed income securities generally are subject to greater market fluctuations and risk of loss of income and principal than are investments in lower-yielding fixed income securities. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. (1) The Balanced Benchmark Index (new) is unmanaged and is calculated based upon the performance of the the following indices 60% S&P 500 Index/40% Lehman Brothers Aggregate Bond Index. This benchmark was changed from the prior year to more accurately reflect the allocation of the Series. (2) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. (3) The Lehman Brothers Aggregate Bond Index is an unmanaged, commonly used measure of bond performance and is provided for general comparative purposes. (4) The Balanced Benchmark Index (old) is unmanaged and is calculated based upon the performance of the followng indices: 55% S&P 500 Index/35% Lehman Brothers Aggregate Bond Index/10% U.S. Treasury Bill. The indices are not available for direct investment. 142 PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ U.S. GOVERNMENT SECURITIES--10.1% U.S. TREASURY BONDS--3.3% U.S. Treasury Bonds 6.125%, 11/15/27 .. AAA $ 2,300 $ 2,419,402 U.S. Treasury Bonds 5.25%, 11/15/28 ... AAA 2,835 2,655,377 U.S. Treasury Bonds 5.25%, 2/15/29 .... AAA 1,910 1,793,236 U.S. Treasury Bonds 6.125%, 8/15/29 ... AAA 4,400 4,669,843 U.S. Treasury Bonds 5.375%, 2/15/31 ... AAA 1,000 985,938 ------------ 12,523,796 ------------ U.S. TREASURY NOTES--6.8% U.S. Treasury Notes 2.75%, 10/31/03 ... AAA 3,539 3,531,398 U.S. Treasury Notes 4.75%, 2/15/04 .... AAA 1,200 1,239,000 U.S. Treasury Notes 5.25%, 5/15/04 .... AAA 840 875,831 U.S. Treasury Notes 4.625%, 5/15/06 ... AAA 12,500 12,674,313 U.S. Treasury Notes 3.50%, 11/15/06 ... AAA 800 771,187 U.S. Treasury Notes 4.75%, 11/15/08 ... AAA 4,275 4,258,302 U.S. Treasury Notes 6%, 8/15/09 ....... AAA 160 170,569 U.S. Treasury Notes 5.75%, 8/15/10 .... AAA 260 272,939 U.S. Treasury Notes 5%, 8/15/11 ....... AAA 1,560 1,556,100 ------------ 25,349,639 ------------ TOTAL U.S. GOVERNMENT SECURITIES (Identified cost $37,309,321) ............................. 37,873,435 ------------ AGENCY NON MORTGAGE-BACKED SECURITIES--3.4% Fannie Mae 4.375%, 10/15/06 ........... Aaa(c) 5,000 4,895,450 Fannie Mae 6.625%, 9/15/09 ............ Aaa(c) 2,395 2,558,296 Freddie Mac 6.625%, 9/15/09 ........... Aaa(c) 5,000 5,322,975 ------------ TOTAL AGENCY NON MORTGAGE-BACKED SECURITIES (Identified cost $12,194,217) ............................. 12,776,721 ------------ MUNICIPAL BONDS--4.2% CALIFORNIA--1.1% Pasadena Pension Funding Revenue Taxable Series A 7.10%, 5/15/10 ............. AAA 1,500 1,606,425 San Bernardino County Pension Obligation Revenue Taxable 6.87%, 8/1/08 ....... AAA 410 436,104 Sonoma County Pension Obligation Revenue Taxable 6.625%, 6/1/13 .............. AAA 925 964,442 Ventura County Pension Obligation Taxable 6.54%, 11/1/05 ...................... AAA 975 1,036,708 ------------ 4,043,679 ------------ FLORIDA--1.7% Miami Beach Special Obligation Revenue Taxable 8.60%, 9/1/21 ............... AAA 3,210 3,497,520 Tampa Solid Waste System Revenue Taxable Series A 6.33%, 10/1/06 ............. AAA 2,160 2,246,594 University of Miami Exchangeable Revenue Taxable Series A 7.65%, 4/1/20 (e) .. AAA 540 558,549 ------------ 6,302,663 ------------ NEW YORK--0.4% New York State Dormitory Authority Pension Obligation Revenue Taxable 6.90%, 4/1/03 .............................. AA- 725 748,642 New York State Environmental Facilities Corp. 6.70%, 3/15/08 ...................... AAA 795 833,097 ------------ 1,581,739 ------------ PENNSYLVANIA--0.4% Philadelphia Authority For Industrial Development Pension Funding Retirement Systems Revenue Taxable Series A 5.79%, 4/15/09 ............................. AAA 1,300 1,290,523 ------------ STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ TEXAS--0.6% Texas Water Resources Finance Authority Revenue 6.62%, 8/15/10 .............. AAA $2,265 $ 2,341,761 ------------ TOTAL MUNICIPAL BONDS (Identified cost $15,044,345) ............................. 15,560,365 ------------ ASSET BACKED SECURITIES--1.8% AESOP Funding II LLC 97-1A, A2 6.40%, 10/20/03 ............................ AAA 2,000 2,043,780 AESOP Funding II LLC 98-1A 6.14%, 5/20/06 ............................. AAA 1,410 1,430,734 Green Tree Financial Corp. 96-7, M1 7.70%, 10/15/27 ............................ AA- 1,000 1,008,797 Premier Auto Trust 98-3, B 6.14%, 9/8/04 ....................... AAA 500 505,477 WFS Financial Owner Trust 00-D, A3 6.83%, 7/20/05 ............................. AAA 1,845 1,911,448 ------------ TOTAL ASSET BACKED SECURITIES (Identified cost $6,775,354) .............................. 6,900,236 ------------ CORPORATE BONDS--2.7% AIRLINES--0.4% American Airlines, Inc. 01-2, A-2 144A 7.858%, 10/1/11 (d) ................. AA+ 500 501,190 Northwest Airlines Corp.00-1 G 8.072%, 10/1/19 ............................. AAA 835 860,642 ------------ 1,361,832 ------------ BROADCASTING (TELEVISION, RADIO & CABLE)--0.3% Comcast Cable Communications, Inc. 7.125%, 6/15/13 ..................... BBB 1,000 1,026,933 ------------ COMPUTERS (SOFTWARE & SERVICES)--0.2% Computer Associates International, Inc. Series B 6.375%, 4/15/05 BBB+ 635 637,843 ------------ DISTRIBUTORS (FOOD & HEALTH)--0.1% AmerisourceBergen Corp. 8.125%, 9/1/08 BB- 560 576,800 ------------ FINANCIAL (DIVERSIFIED)--0.2% Erac U.S.A. Finance Co. 144A 7.35%, 6/15/08 (d) ......................... BBB+ 300 303,792 Pemex Project Funding Master Trust RegS 9.125%, 10/13/10 .................... BB+ 500 530,000 ------------ 833,792 ------------ GAMING, LOTTERY & PARI-MUTUEL COMPANIES--0.2% Harrahs Operating Co, Inc. 7.125%, 6/1/07 ...................... BBB- 250 250,032 MGM Mirage, Inc. 9.75%, 6/1/07 ........ BB+ 400 419,000 ------------ 669,032 ------------ HEALTH CARE (SPECIALIZED SERVICES)--0.1% HEALTHSOUTH Corp. 10.75%, 10/1/08 ..... BB+ 250 276,250 ------------ INSURANCE (MULTI-LINE)--0.1% Willis Corroon Corp. 9%, 2/1/09 ....... B+ 265 276,925 ------------ IRON & STEEL--0.2% Allegheny Technologies 144A 8.375%, 12/15/11 (d) ........................ BBB+ 800 783,918 ------------ NATURAL GAS--0.0% Dynegy Holdings, Inc. 8.125%, 3/15/05 . BBB+ 250 225,262 ------------ OIL--0.1% Conoco Funding Co. 5.45%, 10/15/06 .... BBB+ 250 255,825 ------------ See Notes to Financial Statements 143 PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ OIL & GAS (EXPLORATION & PRODUCTION)--0.2% Chesapeake Energy Corp. 144A 8.375%, 11/1/08 (d) ......................... B+ $ 380 $ 377,150 Hanover Equipment Trust 01-A, 144A 8.50%, 9/1/08 (d) .......................... BB 280 292,600 ------------ 669,750 ------------ PAPER & FOREST PRODUCTS--0.2% Nortek, Inc. 8.875%, 8/1/08 ........... B+ 700 705,250 ------------ RETAIL (SPECIALTY)--0.2% Amerigas Partners Eagle Finance Corp. 8.875%, 5/20/11 ..................... BB+ 750 776,250 ------------ TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.1% AT&T Wireless Services, Inc. 7.35%, 3/1/06 ....................... BBB 250 261,900 ------------ TELECOMMUNICATIONS (LONG DISTANCE)--0.1% WorldCom, Inc. 7.50%, 5/15/11 ......... BBB+ 500 514,338 ------------ TRUCKS & PARTS--0.0% Cummins Engine, Inc. 6.45%, 3/1/05 .... BBB 160 155,951 ------------ TOTAL CORPORATE BONDS (Identified cost $9,893,364) .............................. 10,007,851 ------------ NON-AGENCY MORTGAGE-BACKED SECURITIES--8.5% Advanta Mortgage Loan Trust 00-2, A3 7.76%, 5/25/18 ...................... AAA 875 920,391 CS First Boston Mortgage Securities Corp. 97-C2, A3 6.55%, 11/17/07 ........... AAA 4,200 4,298,730 DLJ Commercial Mortgage Corp. 99-CG1, A1B 6.46%, 1/10/09 ...................... Aaa(c) 500 507,957 DLJ Commercial Mortgage Corp. 98-CF2, A1B 6.24%, 11/12/31 ..................... Aaa(c) 4,150 4,173,186 First Horizon Asset Securities, Inc. 01-5 A3 6.75%, 7/25/31 ...................... AAA 1,000 1,000,000 First Union - Lehman Brothers Commercial Mortgage 97-C1, B 7.43%, 4/18/07 .... Aa(c) 850 905,269 First Union Commercial Mortgage Trust 99-C1, A2 6.07%, 10/15/08 ........... AAA 3,000 3,012,656 G.E. Capital Mortgage Services, Inc. 96-8, 1M 7.25%, 5/25/26 ...................... AA 213 213,502 JP Morgan Chase Commercial Mortgage Securities Corp. 01-CIBC, A3 6.26%, 4/15/33 ............................. AAA 1,810 1,835,453 LB Commercial Conduit Mortgage Trust 98-C4, A1B 6.21%, 10/15/08 .......... AAA 4,000 4,068,198 LB Commercial Conduit Mortgage Trust 99-C2, A2 7.325%, 9/15/09 ........... Aaa(c) 1,840 1,955,003 Lehman Large Loan 97-LLI, B 6.95%, 3/12/07 ............................. AA+ 645 677,743 Nationslink Funding Corp. 96-1, B 7.69%, 12/20/05 ............................ AA 450 471,445 Prudential Home Mortgage Securities 94-A 3B3 6.80%, 4/28/24 .................. AA-(c) 1,388 1,407,993 Residential Funding Mortgage Securities I 96-S1, A11 7.10%, 1/25/26 ........... AAA 1,322 1,346,748 Residential Funding Mortgage Securities I 96-S4, M1 7.25%, 2/25/26 ............ AAA 733 734,410 Securitized Asset Sales, Inc. 93-J, 2B 6.808%, 11/28/23 .................... AAA(c) 735 740,715 Washington Mutual Bank 99-WM3, 2A5 7.50%, 11/19/29 ..................... Aaa(c) 3,350 3,503,531 ------------ TOTAL NON-AGENCY MORTGAGE-BACKED SECURITIES (Identified cost $30,619,009) ............................. 31,772,930 ------------ STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ FOREIGN GOVERNMENT SECURITIES--4.7% BRAZIL--0.5% Federal Republic of Brazil 11%, 8/17/40 ............................. BB- $ 750 $ 579,375 Federal Republic of Brazil C Bond 8%, 4/15/14 ............................. BB- 1,539 1,187,156 ------------ 1,766,531 ------------ BULGARIA--0.9% Republic of Bulgaria FLIRB Series A 4.563%, 7/28/12 (e) ......................... B+ 1,810 1,633,525 Republic of Bulgaria IAB PDI 4.563%, 7/28/11 (e) ......................... B+ 1,817 1,598,652 ------------ 3,232,177 ------------ CHILE--0.2% Republic of Chile 6.875%, 4/28/09 ..... A- 825 835,511 ------------ COLOMBIA--0.3% Republic of Colombia 9.75%, 4/9/11 .... BBB 485 507,700 Republic of Colombia 11.75%, 2/25/20 .. BB 750 750,000 ------------ 1,257,700 ------------ COSTA RICA--0.5% Republic of Costa Rica 144A 9.335%, 5/15/09 (d) ......................... BB 1,755 1,877,850 ------------ CROATIA--0.1% Croatia Series A 4.563%, 7/31/10 (e) .. BBB- 438 431,708 ------------ MEXICO--0.3% United Mexican States 8.125%, 12/30/19 BB+ 1,125 1,095,750 ------------ PANAMA--0.4% Republic of Panama 2.99%, 5/14/02 (e) . BB+ 125 125,890 Republic of Panama 8.875%, 9/30/27 (e) BB+ 1,500 1,387,500 ------------ 1,513,390 ------------ POLAND--1.3% Republic of Poland Bearer PDIP 6%, 10/27/14 (e) ........................ BBB+ 4,732 4,705,581 ------------ URAGUAY--0.2% Oriental Republic of Uruguay 7.875%, 7/15/27 ............................. BBB- 1,000 940,000 ------------ TOTAL FOREIGN GOVERNMENT SECURITIES (Identified cost $16,455,342) ............................. 17,656,198 ------------ FOREIGN CORPORATE BONDS--2.9% CANADA--0.2% Bowater Canada Finance 144A 7.95%, 11/15/11 (d) ........................ BBB 750 768,821 ------------ CAYMAN ISLANDS--2.2% Pemex Finance Ltd. 9.03%, 2/15/11 ..... BBB+ 5,000 5,365,400 Pemex Finance Ltd. 7.33%, 5/15/12 ..... AAA 1,000 1,055,600 Petrobras International Finance 144A 9.75%, 7/6/11 (d) .......................... Baa(c) 1,500 1,485,000 Triton Energy Ltd. 8.875%, 10/1/07 .... BBB 250 277,500 ------------ 8,183,500 ------------ CHILE--0.1% Empresa Nacional de Electricidad SA Series B 8.50%, 4/1/09 ....................... BBB+ 140 143,455 Petropower I Funding Trust 144A 7.36%, 2/15/14 (d) ......................... BBB 431 397,739 ------------ 541,194 ------------ MEXICO--0.1% Telefonos de Mexico SA 8.25%, 1/26/06 . BB+ 500 525,625 ------------ See Notes to Financial Statements 144 PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ NETHERLANDS--0.3% HSBC Capital Funding LP 144A 9.547%, 12/31/49 (d)(e) ..................... A- $ 900 $ 1,041,599 ------------ TOTAL FOREIGN CORPORATE BONDS (Identified cost $10,580,253) ............................. 11,060,739 ------------ SHARES ------ COMMON STOCKS--55.5% AEROSPACE/DEFENSE--1.2% General Dynamics Corp. ......................... 40,000 3,185,600 Northrop Grumman Corp. ......................... 14,800 1,491,988 ------------ 4,677,588 ------------ AIR FREIGHT--0.6% FedEx Corp. (b) ................................ 41,800 2,168,584 ------------ BANKS (MAJOR REGIONAL)--2.3% FleetBoston Financial Corp. .................... 128,200 4,679,300 Wells Fargo & Co. .............................. 90,000 3,910,500 ------------ 8,589,800 ------------ BANKS (MONEY CENTER)--1.7% Bank of America Corp. .......................... 101,400 6,383,130 ------------ BEVERAGES (NON-ALCOHOLIC)--2.0% PepsiCo, Inc. .................................. 156,000 7,595,640 ------------ BROADCASTING (TELEVISION, RADIO & CABLE)--1.5% Clear Channel Communications, Inc. (b) ......... 85,700 4,362,987 Liberty Media Corp. Class A (b) ................ 97,600 1,366,400 ------------ 5,729,387 ------------ CHEMICALS--0.5% Dow Chemical Co. (The) ......................... 59,000 1,993,020 ------------ COMMUNICATIONS EQUIPMENT--0.8% ADTRAN, Inc. (b) ............................... 43,900 1,120,328 American Tower Corp. Class A (b) ............... 67,800 642,066 Harris Corp. ................................... 45,800 1,397,358 ------------ 3,159,752 ------------ COMPUTERS (HARDWARE)--1.4% International Business Machines Corp. .......... 45,000 5,443,200 ------------ COMPUTERS (NETWORKING)--1.0% Cisco Systems, Inc. (b) ........................ 204,000 3,694,440 ------------ COMPUTERS (PERIPHERALS)--0.3% Maxtor Corp. (b) ............................... 181,400 1,150,076 ------------ COMPUTERS (SOFTWARE & SERVICES)--3.4% Computer Associates International, Inc. ........ 89,400 3,083,406 Microsoft Corp. (b) ............................ 146,500 9,705,625 ------------ 12,789,031 ------------ DISTRIBUTORS (FOOD & HEALTH)--2.4% Cardinal Health, Inc. .......................... 35,400 2,288,964 McKesson Corp. ................................. 169,700 6,346,780 Performance Food Group Co. (b) ................. 5,500 193,435 ------------ 8,829,179 ------------ ELECTRICAL EQUIPMENT--2.4% General Electric Co. ........................... 229,200 9,186,336 ------------ ELECTRONICS (SEMICONDUCTORS)--1.6% Altera Corp. (b) ............................... 86,800 1,841,896 Fairchild Semiconductor Corp. Class A (b) ...... 62,200 1,754,040 Intel Corp. .................................... 42,600 1,339,770 Micron Technology, Inc. (b) .................... 38,200 1,184,200 ------------ 6,119,906 ------------ SHARES VALUE ------ ---------- ENTERTAINMENT--1.5% AOL Time Warner, Inc. (b) ...................... 61,400 $ 1,970,940 Viacom, Inc. Class B (b) ....................... 84,800 3,743,920 ------------ 5,714,860 ------------ EQUIPMENT (SEMICONDUCTORS)--1.8% Applied Materials, Inc. (b) .................... 50,900 2,041,090 Credence Systems Corp. (b) ..................... 34,800 646,236 Lam Research Corp. (b) ......................... 97,500 2,263,950 Novellus Systems, Inc. (b) ..................... 17,000 670,650 Teradyne, Inc. (b) ............................. 32,800 988,592 ------------ 6,610,518 ------------ FINANCIAL (DIVERSIFIED)--5.3% Citigroup, Inc. ................................ 177,700 8,970,296 Freddie Mac .................................... 59,800 3,910,920 J.P. Morgan Chase & Co. ........................ 61,500 2,235,525 Morgan Stanley Dean Witter & Co. ............... 85,600 4,788,464 ------------ 19,905,205 ------------ FOODS--0.5% Dean Foods Co. ................................. 27,110 1,848,900 ------------ HEALTH CARE (DIVERSIFIED)--0.8% Bristol-Myers Squibb Co. ....................... 61,100 3,116,100 ------------ HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--1.6% Pfizer, Inc. ................................... 153,200 6,105,020 ------------ HEALTH CARE (GENERIC AND OTHER)--0.8% King Pharmaceuticals, Inc. (b) ................. 67,733 2,853,591 ------------ HEALTH CARE (HOSPITAL MANAGEMENT)--0.3% HCA, Inc. ...................................... 29,500 1,136,930 ------------ HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.5% Bard (C.R.), Inc. .............................. 48,600 3,134,700 Beckman Coulter, Inc. .......................... 23,400 1,036,620 Guidant Corp. (b) .............................. 27,000 1,344,600 ------------ 5,515,920 ------------ HEALTH CARE (SPECIALIZED SERVICES)--0.6% Omnicare, Inc. ................................. 95,600 2,378,528 ------------ INSURANCE (MULTI-LINE)--1.8% American International Group, Inc. ............. 84,400 6,701,360 ------------ MANUFACTURING (DIVERSIFIED)--2.6% Tyco International Ltd. ........................ 163,500 9,630,150 ------------ OFFICE EQUIPMENT & SUPPLIES--0.3% Miller (Herman), Inc. .......................... 49,700 1,175,902 ------------ OIL--0.4% Conoco, Inc. ................................... 48,000 1,358,400 ------------ OIL & GAS (DRILLING & EQUIPMENT)--0.8% Baker Hughes, Inc. ............................. 21,500 784,105 Schlumberger Ltd. .............................. 13,400 736,330 Tidewater, Inc. ................................ 26,500 898,350 Transocean Sedco Forex, Inc. ................... 15,400 520,828 ------------ 2,939,613 ------------ OIL & GAS (EXPLORATION & PRODUCTION)--0.6% Anadarko Petroleum Corp. ....................... 17,800 1,011,930 Unocal Corp. ................................... 31,300 1,128,991 ------------ 2,140,921 ------------ OIL (INTERNATIONAL INTEGRATED)--1.1% ChevronTexaco Corp. ............................ 16,200 1,451,682 Exxon Mobil Corp. .............................. 64,400 2,530,920 ------------ 3,982,602 ------------ See Notes to Financial Statements 145 PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES SHARES VALUE ------ ---------- PAPER & FOREST PRODUCTS--0.3% International Paper Co. ........................ 30,500 $ 1,230,675 ------------ RETAIL (COMPUTERS & ELECTRONICS)--0.6% Tech Data Corp. (b) ............................ 55,100 2,384,728 ------------ RETAIL (DRUG STORES)--0.5% Caremark Rx, Inc. (b) .......................... 106,600 1,738,646 ------------ RETAIL (GENERAL MERCHANDISE)--1.4% Wal-Mart Stores, Inc. .......................... 91,800 5,283,090 ------------ SAVINGS & LOAN COMPANIES--0.4% Golden State Bancorp, Inc. ..................... 55,000 1,438,250 ------------ SERVICES (ADVERTISING/MARKETING)--0.9% Lamar Advertising Co. (b) ...................... 76,100 3,222,074 ------------ SERVICES (COMMERCIAL & CONSUMER)--1.3% Cendant Corp. (b) .............................. 170,600 3,345,466 Crown Castle International Corp. (b) ........... 141,900 1,515,492 ------------ 4,860,958 ------------ SERVICES (DATA PROCESSING)--1.9% BISYS Group, Inc. (The) (b) .................... 41,200 2,636,388 Fiserv, Inc. (b) ............................... 102,450 4,335,684 ------------ 6,972,072 ------------ TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.3% Nextel Communications, Inc. Class A (b) ........ 90,200 988,592 ------------ TELEPHONE--1.3% SBC Communications, Inc. ....................... 82,400 3,227,608 Verizon Communications, Inc. ................... 35,900 1,703,814 ------------ 4,931,422 ------------ TEXTILES (APPAREL)--0.6% Jones Apparel Group, Inc. (b) .................. 24,800 822,616 Liz Claiborne, Inc. ............................ 26,500 1,318,375 ------------ 2,140,991 ------------ TRUCKERS--0.6% United Parcel Service, Inc. Class B ............ 41,300 2,250,850 ------------ TOTAL COMMON STOCKS (Identified cost $170,403,626) ............................ 208,065,937 ------------ FOREIGN COMMON STOCKS--0.9% COMMUNICATIONS EQUIPMENT--0.3% Nokia Oyj ADR (Finland) ........................ 42,500 1,042,525 ------------ HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--0.6% Elan Corp. plc ADR (Ireland) (b) ............... 51,700 2,329,602 ------------ TOTAL FOREIGN COMMON STOCKS (Identified cost $2,698,298) .............................. 3,372,127 ------------ UNIT INVESTMENT TRUSTS--1.3% SPDR Trust Series I ............................ 41,600 4,760,704 ------------ TOTAL UNIT INVESTMENT TRUSTS (Identified cost $5,465,926) .............................. 4,760,704 ------------ TOTAL LONG-TERM INVESTMENTS--96.0% (Identified cost $317,439,055) ............................ 359,807,243 ------------ STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) VALUE ----------- ----- ------------ SHORT-TERM OBLIGATIONS--3.6% COMMERCIAL PAPER--2.9% Asset Securitization Corp. 1.75%, 1/2/02 .............................. A-1+ $3,185 $ 3,184,845 Lexington Parker Capital Co. LLC 1.95%, 1/9/02 .............................. A-1 2,005 2,004,131 Gannett Co, Inc. 1.84%, 1/23/02 ....... A-1 1,290 1,288,550 Park Avenue Receivables 1.97%, 1/25/02 A-1 3,500 3,495,404 Lexington Parker Capital Co. LLC 1.86%, 3/13/02 ............................. A-1 1,140 1,135,921 ------------ 11,108,851 ------------ FEDERAL AGENCY SECURITIES--0.7% Federal Home Loan Bank 2.25%, 12/27/02 AAA 2,500 2,498,885 ------------ TOTAL SHORT-TERM OBLIGATIONS (Identified cost $13,608,747) ............................. 13,607,736 ------------ TOTAL INVESTMENTS--99.6% (Identified cost $331,047,802) ............................ 373,414,979(a) Other assets and liabilities, net--0.4% ................... 1,401,856 ------------ NET ASSETS--100.0% .......................................... $374,816,835 ============ (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $52,941,695 and gross depreciation of $10,986,832 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $331,460,116. (b) Non-income producing. (c) As rated by Moody's or Fitch. (d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2001, these securities amounted to a value of $7,829,659 or 2.09% of net assets. (e) Variable or step coupon security; interest rate shown reflects the rate currently in effect. See Notes to Financial Statements 146 PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $331,047,802) ... $373,414,979 Cash ............................................................ 48,750 Receivables Interest and dividends ........................................ 1,939,012 Fund shares sold .............................................. 40,877 Prepaid expenses ................................................ 3,389 ------------ Total assets ................................................ 375,447,007 ------------ LIABILITIES Payables Fund shares repurchased ....................................... 302,809 Investment advisory fee ....................................... 185,299 Printing fee .................................................. 86,702 Financial agent fee ........................................... 23,300 Trustees' fee ................................................. 3,262 Accrued expenses ................................................ 28,800 ------------ Total liabilities ........................................... 630,172 ------------ NET ASSETS ...................................................... $374,816,835 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest .............. $338,278,037 Undistributed net investment income ........................... 806,279 Accumulated net realized loss ................................. (6,634,658) Net unrealized appreciation ................................... 42,367,177 ------------ NET ASSETS ...................................................... $374,816,835 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ......................... 26,935,870 ============ Net asset value and offering price per share .................... $13.92 ====== STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Interest ...................................................... $10,628,141 Dividends ..................................................... 2,140,446 Foreign taxes withheld ........................................ (105) ----------- Total investment income ..................................... 12,768,482 ----------- EXPENSES Investment advisory fee ....................................... 2,272,974 Financial agent fee ........................................... 290,434 Printing ...................................................... 84,575 Custodian ..................................................... 57,378 Professional .................................................. 27,464 Trustees ...................................................... 8,437 Miscellaneous ................................................. 38,969 ----------- Total expenses .............................................. 2,780,231 Custodian fees paid indirectly .............................. (19,079) ----------- Net expenses ................................................ 2,761,152 ----------- NET INVESTMENT INCOME ........................................... 10,007,330 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ............................... (2,464,632) Net change in unrealized appreciation (depreciation) on investments ............................... (1,068,355) ----------- NET LOSS ON INVESTMENTS ......................................... (3,532,987) ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............ $ 6,474,343 =========== See Notes to Financial Statements 147 PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ---------- ---------- FROM OPERATIONS Net investment income (loss) ........................................................... $ 10,007,330 $ 11,688,744 Net realized gain (loss) ............................................................... (2,464,632) 39,681,266 Net change in unrealized appreciation (depreciation) ................................... (1,068,355) (49,097,278) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONs ............................ 6,474,343 2,272,732 ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income .................................................................. (9,798,013) (11,570,242) Net realized short-term gains .......................................................... (2,336,653) (2,432,207) Net realized long-term gains ........................................................... (4,043,514) (39,971,460) ------------ ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS .............................. (16,178,180) (53,973,909) ------------ ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (2,160,117 and 1,631,276 shares, respectively) ........... 30,160,519 26,157,958 Net asset value of shares issued from reinvestment of distributions (1,176,732 and 3,666,338 shares, respectively) ....................................... 16,178,180 53,973,909 Cost of shares repurchased (5,455,567 and 5,700,696 shares, respectively) .............. (75,830,661) (91,126,573) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS .............................. (29,491,962) (10,994,706) ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS .................................................. (39,195,799) (62,695,883) NET ASSETS Beginning of period .................................................................... 414,012,634 476,708,517 ------------ ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $806,279 AND $626,418, RESPECTIVELY) .......................................................... $374,816,835 $414,012,634 ============ ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) YEAR ENDED DECEMBER 31, ------------------------------------------------- 2001(3) 2000 1999 1998 1997 -------- -------- -------- -------- -------- Net asset value, beginning of period ................................... $14.25 $16.18 $15.65 $14.12 $13.65 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ......................................... 0.36(1) 0.44 0.36 0.29 0.32 Net realized and unrealized gain (loss) .............................. (0.11) (0.33) 1.36 2.57 2.46 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ................................... 0.25 0.11 1.72 2.86 2.78 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ................................. (0.35) (0.43) (0.36) (0.28) (0.33) Dividends from net realized gains .................................... (0.23) (1.61) (0.83) (1.05) (1.98) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS ................................................ (0.58) (2.04) (1.19) (1.33) (2.31) ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE .............................................. (0.33) (1.93) 0.53 1.53 0.47 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ......................................... $13.92 $14.25 $16.18 $15.65 $14.12 ====== ====== ====== ====== ====== Total return ........................................................... 1.87% 0.58% 11.26% 20.79% 20.73% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) .................................. $374,817 $414,013 $476,709 $480,897 $429,002 RATIO TO AVERAGE NET ASSETS OF: Operating expenses ................................................... 0.71%(2) 0.70% 0.70% 0.68% 0.71% Net investment income ................................................ 2.56% 2.65% 2.21% 1.97% 2.09% Portfolio turnover rate ................................................ 44% 60% 65% 139% 368%
(1) Computed using average shares outstanding. (2) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (3) As required, effective January 1, 2001, the Fund has adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities and including paydown gains and losses in interest income. The effect of this change for the year ended December 31, 2001 to decrease the ratio of net investment income to average net assets from 2.60% to 2.56%. There was no effect to net investment income per share and net realized and unrealized gain (loss) per share. Per share ratios and supplemental data for prior periods have not been restated to reflect this change. See Notes to Financial Statements 148 PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking long-term capital growth through investment in equity securities of foreign and U.S. companies. INVESTMENT ADVISER'S REPORT For the year 2001, the Phoenix-Sanford Bernstein Global Value Series strongly outperformed the MSCI World Index(1) returning -6.84% while the Index's return for the year was -16.52%. Our 2001 premium came primarily from stock selection. And most of this strong stock selection resulted from picking better-than-average performers across virtually all sectors. In addition, we benefited from our decision to emphasize certain sectors while underweighting others. In particular, our underweight of the Technology/Electronics sector--which underperformed massively for the year, despite a fourth-quarter rally--contributed to our premium. We were also successful at picking the right stocks across most geographies, with outperformance in virtually every large market. Strong stock selection--in the US was by far the biggest contributor to relative returns, though stock selection in Japan and the UK also helped. We gained a meaningful portion of our stock-selection premium for the year in particularly challenging environments--the Japanese market and economically sensitive industries. Japan is the major exception cited in most predictions of a global economic recovery. It recently re-entered recession, and few economists expect it to emerge anytime soon. Nonetheless, we have found many good Japanese companies to invest in. For some time, we have been emphasizing global winners that are not dependent on the domestic economy; these have been performing very well for us. It is more challenging, perhaps, to find companies with a domestic focus that can generate earnings growth. Even here, however, we have had successes. We have also produced a premium in the weak Finance sector by focusing on regional banks rather than large money-center banks whose capital has been eroded by exposure to nonperforming real-estate loans. Many cyclical stocks enjoyed strong performance despite the weak global economy. In some cases, the strong performers are companies whose conservative investment patterns during recent cyclical peaks have positioned them to weather a continued downturn and recover quickly in the event of an economic turnaround. Our holdings in the Consumer Cyclical, Capital Equipment and Transportation sectors were especially strong this year. In terms of country bets, below-index exposure to the Finnish market, which was the weakest performer in 2001, and above-index exposure to New Zealand, which thrived during the year, were two major positives for the Fund. OUTLOOK The Fund appears well positioned for various economic scenarios. As the pricing disparities that characterized markets just a few years ago have largely dissipated, we will continue to rely on research to identify quality companies at low prices--the type that can both weather a downturn and ride a recovery. In short, we see considerable investment opportunities outside the US today, and we have positioned our portfolios to exploit the strongest opportunities we see. 149 PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Global Value Series MSCI World Index(1) S&P 500 Index(2) 11/20/00 $10,000.00 $10,000.00 $10,000.00 12/29/00 10,435.10 10,163.20 9 844.46 12/31/01 9,721.45 8,484.12 8 675.44 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 11/20/00 TO 1 YEAR 12/31/01 - ------------------------------------------------------------------------- Global Value Series (6.84)% (2.51)% - ------------------------------------------------------------------------- MSCI World Index(1) (16.52)% (14.06)% - ------------------------------------------------------------------------- S&P 500 Index(2) (11.87)% (11.99)% - ------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 11/20/00 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. (1) The MSCI World Index is an unmanaged, commonly used measure of global value-oriented stock total return performance. (2) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 150 PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE ------ ----------- COMMON STOCKS--48.4% UNITED STATES--48.4% Abbott Laboratories (Health Care (Diversified)) ............................... 900 $ 50,175 Acuity Brands, Inc. (Electrical Equipment) (b) ............................... 400 4,840 Adaptec, Inc. (Electronics (Semiconductors)) (b) ........................ 400 5,800 Allstate Corp. (The) (Insurance (Property-Casualty)) ......................... 900 30,330 Amerada Hess Corp. (Oil) ....................... 300 18,750 Ameren Corp. (Electric Companies) .............. 400 16,920 American Electric Power Co., Inc. (Electric Companies) ................................... 600 26,118 American Home Products Corp. (Health Care (Diversified)) ............................... 150 9,204 American International Group, Inc. (Insurance (Multi-Line)) ................................ 700 55,580 Amgen, Inc. (Biotechnology) (b) ................ 100 5,644 AmSouth Bancorp. (Banks (Major Regional)) ...... 1,200 22,680 AOL Time Warner, Inc. (Entertainment) (b) ...... 1,150 36,915 Aon Corp. (Insurance Brokers) .................. 700 24,864 Archer-Daniels-Midland Co. (Agricultural Products) .................................... 1,785 25,615 Arrow Electronics, Inc. (Electronics (Component Distributors)) (b) ........................... 800 23,920 Ashland, Inc. (Oil & Gas (Refining & Marketing)) .................................. 550 25,344 AT&T Corp. (Telecommunications (Long Distance)) ................................... 1,900 34,466 Avnet, Inc. (Electronics (Component Distributors)) ............................... 800 20,376 Bank of America Corp. (Banks (Money Center)) ... 1,200 75,540 Bank One Corp. (Banks (Major Regional)) ........ 1,025 40,026 Bear Stearns Cos., Inc. (The) (Investment Banking/Brokerage) ........................... 400 23,456 BellSouth Corp. (Telephone) .................... 400 15,260 Bemis Co., Inc. (Containers & Packaging (Paper)) 500 24,590 Big Lots, Inc. (Retail (Discounters)) .......... 1,000 10,400 Black & Decker Corp. (The) (Hardware & Tools) .. 525 19,808 Bristol-Myers Squibb Co. (Health Care (Diversified)) ............................... 1,000 51,000 Burlington Northern Santa Fe Corp. (Railroads) . 975 27,817 Cabot Corp. (Chemicals) ........................ 650 23,205 Centex Corp. (Homebuilding) .................... 250 14,272 Charter One Financial, Inc. (Savings & Loan Companies) ................................... 840 22,806 ChevronTexaco Corp. (Oil (International Integrated)) ................................. 515 46,149 Cinergy Corp. (Electric Companies) ............. 750 25,072 Cisco Systems, Inc. (Computers (Networking)) (b) ............................ 2,100 38,031 Citigroup, Inc. (Financial (Diversified)) ...... 1,930 97,426 CMS Energy Corp. (Electric Companies) .......... 500 12,015 Coca-Cola Co. (The) (Beverages (Non-Alcoholic)) ............................. 600 28,290 Comerica, Inc. (Banks (Major Regional)) ........ 400 22,920 Compuware Corp. (Computers (Software & Services)) (b) ............................... 2,000 23,580 ConAgra Foods, Inc. (Foods) .................... 1,075 25,553 Consolidated Edison, Inc. (Electric Companies) . 600 24,216 Cooper Industries, Inc. (Electrical Equipment) . 700 24,444 Dana Corp. (Auto Parts & Equipment) ............ 600 8,328 Dell Computer Corp. (Computers (Hardware)) (b) . 400 10,872 Delphi Automotive Systems (Auto Parts & Equipment) ................................... 1,400 19,124 Donnelley (R.R.) & Sons Co. (Specialty Printing) .................................... 800 23,752 Dow Chemical Co. (The) (Chemicals) ............. 1,244 42,022 Du Pont (E.I.) de Nemours & Co. (Chemicals) .... 800 34,008 Eastman Chemical Co. (Chemicals) ............... 300 11,706 Eaton Corp. (Manufacturing (Diversified)) ...... 75 5,581 Electronic Data Systems Corp. (Services (Computer Systems)) .......................... 600 41,130 Exxon Mobil Corp. (Oil (International Integrated)) ................................. 2,600 102,180 Fannie Mae (Financial (Diversified)) ........... 775 61,612 Federated Department Stores, Inc. (Retail (Department Stores)) (b) 500 20,450 FleetBoston Financial Corp. (Banks (Major Regional)) ................................... 1,081 39,456 FMC Corp. (Chemicals (Diversified)) (b) ........ 300 17,850 Fortune Brands, Inc. (Housewares) .............. 600 23,754 Freddie Mac (Financial (Diversified)) .......... 300 19,620 General Electric Co. (Electrical Equipment) .... 4,000 160,320 SHARES VALUE ------ ----------- UNITED STATES--CONTINUED Genuine Parts Co. (Auto Parts & Equipment) ..... 800 $ 29,360 Georgia-Pacific Corp. (Paper & Forest Products) .................................... 850 23,468 Golden West Financial Corp. (Savings & Loan Companies) ................................... 475 27,954 Goodrich Corp. (Aerospace/Defense) ............. 825 21,962 Goodyear Tire & Rubber Co. (The) (Auto Parts & Equipment) ................................... 800 19,048 Health Net, Inc. (Health Care (Managed Care)) (b) 1,100 23,958 Hewlett-Packard Co. (Computers (Hardware)) ..... 2,250 46,215 Hilton Hotels Corp. (Lodging - Hotels) ......... 1,400 15,288 Home Depot, Inc. (The) (Retail (Building Supplies)) ................................... 300 15,303 Household International,Inc. (Consumer Finance) 125 7,243 Hubbell, Inc. Class B (Electrical Equipment) ... 500 14,690 Huntington Bancshares, Inc. (Banks (Major Regional)) ................................... 1,300 22,347 Intel Corp. (Electronics (Semiconductors)) ..... 1,900 59,755 International Business Machines Corp. (Computers (Hardware)) ....................... 600 72,576 International Paper Co. (Paper & Forest Products) 300 12,105 ITT Industries, Inc. (Manufacturing (Diversified)) ............................... 300 15,150 J.P. Morgan Chase & Co. (Financial (Diversified)) ............................... 900 32,715 Johnson & Johnson (Health Care (Diversified)) .. 900 53,190 Jones Apparel Group, Inc. (Textiles (Apparel)) (b) ............................... 700 23,219 KeyCorp (Banks (Major Regional)) ............... 1,150 27,991 Lear Corp. (Auto Parts & Equipment) (b) ........ 650 24,791 Leggett & Platt, Inc. (Household Furnishings & Appliances) .................................. 1,000 23,000 Lehman Brothers Holdings, Inc. (Investment Banking/Brokerage) ........................... 325 21,710 Lilly (Eli) & Co. (Health Care (Drugs-Major Pharmaceuticals)) ............................ 200 15,708 Liz Claiborne, Inc. (Textiles (Apparel)) ....... 400 19,900 Lockheed Martin Corp. (Aerospace/Defense) ...... 125 5,834 Louisiana-Pacific Corp. (Paper & Forest Products) .................................... 1,000 8,440 Lubrizol Corp. (The) (Chemicals (Specialty)) ... 500 17,545 May Department Stores Co. (The) (Retail (Department Stores)) ......................... 700 25,886 Mead Corp. (The) (Paper & Forest Products) ..... 700 21,623 Medtronic, Inc. (Health Care (Medical Products & Supplies)) (b) ............................... 100 5,121 Merck & Co., Inc. (Health Care (Drugs-Major Pharmaceuticals)) ............................ 1,100 64,680 MetLife, Inc. (Insurance (Life/Health)) ........ 775 24,552 MGIC Investment Corp. (Insurance (Property- Casualty)) ................................... 400 24,688 Microsoft Corp. (Computers (Software & Services)) (b) 2,050 135,813 Millennium Chemicals, Inc. (Chemicals (Specialty)) ................................. 650 8,190 National City Corp. (Banks (Major Regional)) ... 1,000 29,240 Norfolk Southern Corp. (Railroads) ............. 1,300 23,829 Oracle Corp. (Computers (Software & Services)) (b) ............................... 1,000 13,810 Pfizer, Inc. (Health Care (Drugs-Major Pharmaceuticals)) ............................ 3,300 131,505 PG&E Corp. (Electric Companies) (b) ............ 950 18,278 Pharmacia Corp. (Health Care (Drugs-Major Pharmaceuticals)) ............................ 950 40,518 Philip Morris Cos., Inc. (Tobacco) ............. 1,525 69,921 Phillips Petroleum Co. (Oil) ................... 300 18,078 PPG Industries, Inc. (Chemicals (Diversified)) . 500 25,860 Praxair, Inc. (Chemicals) ...................... 600 33,150 Procter & Gamble Co. (The) (Household Products (Non-Durable)) ............................... 200 15,826 Quantum Corp. - DLT & Storage Systems (Computers (Peripherals)) (b) ........................... 1,400 13,790 Regions Financial Corp. (Banks (Major Regional)) ................................... 800 23,952 Sara Lee Corp. (Foods) ......................... 900 20,007 SBC Communications, Inc. (Telephone) ........... 900 35,253 Schering-Plough Corp. (Health Care (Drugs- Major Pharmaceuticals)) ...................... 500 17,905 Sears, Roebuck and Co. (Retail (General Merchandise)) ................................ 700 33,348 See Notes to Financial Statements 151 PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES SHARES VALUE ------ ----------- UNITED STATES--CONTINUED Sherwin-Williams Co. (The) (Retail (Building Supplies)) ................................... 950 $ 26,125 Smurfit-Stone Container Corp. (Paper & Forest Products) (b) ................................ 1,200 19,164 Solectron Corp. (Electrical Equipment) (b) ..... 1,700 19,176 Sonoco Products Co. (Containers & Packaging (Paper)) ..................................... 900 23,922 SouthTrust Corp. (Banks (Major Regional)) ...... 1,200 29,604 Sprint Corp. (FON Group) (Telecommunications (Long Distance)) ............................. 1,000 20,080 St. Paul Cos., Inc. (The) (Insurance (Property- Casualty)) ................................... 525 23,084 Sun Company, Inc. (Oil & Gas (Refining & Marketing)) .................................. 600 22,404 SunTrust Banks, Inc. (Banks (Major Regional)) .. 500 31,350 SUPERVALU, Inc. (Distributors (Food & Health)) . 500 11,060 Tech Data Corp. (Retail (Computers & Electronics)) (b) ............................ 200 8,656 Temple-Inland, Inc. (Containers & Packaging (Paper)) ..................................... 200 11,346 Texas Instruments, Inc. (Electronics (Semiconductors)) ............................ 200 5,600 TJX Cos., Inc. (The) (Retail (Specialty- Apparel)) .................................... 700 27,902 Torchmark Corp. (Insurance (Life/Health)) ...... 500 19,665 TRW, Inc. (Auto Parts & Equipment) ............. 500 18,520 Tyson Foods, Inc. Class A (Foods) .............. 2,100 24,255 U.S. Bancorp (Banks (Major Regional)) .......... 2,165 45,313 Ultramar Diamond Shamrock Corp. (Oil & Gas (Refining & Marketing)) ...................... 200 9,896 Union Pacific Corp. (Railroads) ................ 500 28,500 Union Planters Corp. (Banks (Major Regional)) .. 500 22,565 V. F. Corp. (Textiles (Apparel)) ............... 400 15,604 Valero Energy Corp. (Oil & Gas (Refining & Marketing)) .................................. 250 9,530 Verizon Communications, Inc. (Telephone) ....... 1,700 80,682 Viacom, Inc. Class B (Entertainment) (b) ....... 200 8,830 Wachovia Corp. (Banks (Money Center)) .......... 1,800 56,448 Wal-Mart Stores, Inc. (Retail (General Merchandise)) ................................ 1,400 80,570 Walt Disney Co. (The) (Entertainment) .......... 150 3,108 Washington Mutual, Inc. (Savings & Loan Companies) ................................... 1,025 33,518 Wells Fargo & Co. (Banks (Major Regional)) ..... 775 33,674 Western Resources, Inc. (Electric Companies) ... 700 12,040 Westvaco Corp. (Paper & Forest Products) ....... 650 18,493 Whirlpool Corp. (Household Furnishings & Appliances) .................................. 400 29,332 WorldCom, Inc. - WorldCom Group (Telecommunications (Long Distance)) (b) ..... 3,000 42,240 Xcel Energy, Inc. (Electric Companies) ......... 700 19,418 ----------- 4,262,144 ----------- TOTAL COMMON STOCKS (Identified cost $4,199,382) ................... 4,262,144 ----------- FOREIGN COMMON STOCKS--49.3% AUSTRALIA--2.5% Australia and New Zealand Banking Group Ltd. (Banks (Money Center)) ....................... 11,600 105,748 BHP Billiton Ltd (Metals Mining) ............... 8,400 45,149 Coles Myer Ltd. (Retail (Food Chains)) ......... 6,800 29,239 CSR Ltd. (Construction (Cement & Aggregates)) .. 10,600 36,843 ----------- 216,979 ----------- AUSTRIA--0.6% Erste Bank der oesterreichischen Sparkassen AG (Banks (Money Center)) ....................... 300 15,947 OMV AG (Oil & Gas (Refining & Marketing)) ...... 250 20,951 Voest-Alpine AG (Iron & Steel) ................. 500 14,290 ----------- 51,188 ----------- CANADA--4.3% Abitibi-Consolidated, Inc. (Paper & Forest Products) .................................... 4,700 34,243 Bank of Montreal (Banks (Money Center)) ........ 1,407 31,653 Bank of Nova Scotia (Banks (Money Center)) ..... 2,300 70,545 BCE, Inc. (Telecommunications (Long Distance)) . 700 15,791 Canadian National Railway Co. (Railroads) ...... 700 33,635 Canadian Natural Resources Ltd. (Oil & Gas (Exploration & Production)) .................. 400 9,600 SHARES VALUE ------ ----------- CANADA--CONTINUED Creo Products, Inc. (Electronics (Component Distributors)) (b) ........................... 600 $ 7,706 Leitch Technology Corp. (Communications Equipment) (b) ............................... 900 6,625 Manulife Financial Corp. (Insurance (Life/Health)) ............................... 900 23,455 Nortel Networks Corp. (Communications Equipment) 4,950 36,902 Petro Canada (Oil (International Integrated)) .. 500 12,313 Quebecor World, Inc. (Specialty Printing) ...... 1,000 22,478 Sun Life Financial Services of Canada (Insurance (Life/Health)) ............................... 500 10,634 Talisman Energy Inc. (Oil & Gas (Exploration & Production)) ................................. 1,250 47,376 TrizecHahn Corp. (Homebuilding) ................ 1,100 17,400 ----------- 380,356 ----------- FINLAND--0.4% Stora Enso Oyj (Paper & Forest Products) ....... 1,000 12,804 UPM-Kymmene Oyj (Paper & Forest Products) ...... 700 23,216 ----------- 36,020 ----------- FRANCE--4.3% Accor SA (Lodging - Hotels) .................... 300 10,906 Alcatel SA Class A (Communications Equipment) .. 400 6,838 Assurances Generales de France (Insurance (Multi-Line)) ................................ 600 28,795 Aventis SA (Health Care (Drugs-Major Pharmaceuticals)) ............................ 550 39,054 BNP Paribas SA (Banks (Money Center)) .......... 350 31,319 Bull SA (Computers (Hardware)) (b) ............. 2,000 2,190 Cap Gemini SA (Computers (Software & Services)) 70 5,055 Compagnie de Saint-Gobain (Containers & Packaging (Paper)) ........................... 200 30,184 Compagnie Generale des Etablissements Michelin (Auto Parts & Equipment) ..................... 200 6,598 Etablissements Econdmiques du Casino Guichard - Perrachon SA (Retail (Food Chains)) .......... 100 7,715 Lagardere S.C.A. (Publishing) .................. 300 12,554 LVMH Moet Hennessy Louis Vuitton SA (Textiles (Apparel)) ................................... 200 8,138 Orange SA (Telecommunications (Cellular/ Wireless)) (b) ............................... 1,800 16,315 PSA Peugeot Citreon (Automobiles) .............. 1,160 49,318 Sanofi-Synthelabo SA (Health Care (Drugs-Major Pharmaceuticals)) ............................ 150 11,192 Societe Generale (Banks (Money Center)) ........ 450 25,182 Suez SA (Electric Companies) ................... 750 22,705 TotalFinaElf SA (Oil & Gas (Refining & Marketing)) .................................. 260 37,132 Usinor SA (Iron & Steel) ....................... 1,400 17,514 Vivendi Universal SA (Broadcasting (Television, Radio & Cable)) .............................. 200 10,952 ----------- 379,656 ----------- GERMANY--3.7% Allianz AG (Insurance (Multi-Line)) ............ 30 7,092 AMB Generali Holding AG (Insurance (Multi-Line)) ................................ 270 28,367 BASF AG (Chemicals (Diversified)) .............. 400 14,905 Bayer AG (Chemicals (Diversified)) ............. 200 6,357 Bayerische Hypo- und Vereinsbank AG (Banks (Money Center)) .............................. 500 15,203 Celanese AG (Chemicals (Specialty)) ............ 1,350 25,483 Continental AG (Auto Parts & Equipment) ........ 600 7,880 DaimlerChrysler AG (Automobiles) ............... 400 17,131 Deutsche Bank AG (Banks (Money Center)) ........ 150 10,591 Deutsche Telekom AG (Telecommunications (Long Distance)) ................................... 1,200 20,728 E.On AG (Manufacturing (Diversified)) .......... 500 25,999 Gehe AG (Health Care (Medical Products & Supplies)) ................................... 300 11,619 Hannover Rueckversicherungs AG (Insurance (Property-Casualty)) ......................... 450 27,165 Heidelberger Zement AG (Construction (Cement & Aggregates)) ................................. 150 6,945 KarstadtQuelle AG (Retail (Department Stores)) . 450 17,589 See Notes to Financial Statements 152 PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES SHARES VALUE ------ ----------- GERMANY--CONTINUED Merck KGaA (Health Care (Drugs-Major Pharmaceuticals)) ............................ 200 $ 7,319 Muenchener Rueckversicherungs-Gesellschaft AG (Insurance (Multi-Line)) ..................... 80 21,725 Rheinisch Westfuelishes AG (Manufacturing (Diversified)) ............................... 250 7,123 SAP AG (Computers (Software & Services)) ....... 50 6,554 Siemens AG (Manufacturing (Diversified)) ....... 525 34,989 Volkswagen AG (Automobiles) .................... 200 9,313 ----------- 330,077 ----------- HONG KONG--0.7% CLP Holdings Ltd. (Electric Companies) ......... 2,400 9,156 Kerry Properties Ltd. (Financial (Diversified)) 6,000 5,848 Wharf Holdings Ltd. (The) (Financial (Diversified)) ............................... 15,000 36,645 Wing Lung Bank Ltd. (Banks (Major Regional)) ... 2,000 7,463 ----------- 59,112 ----------- IRELAND--0.5% Bank of Ireland (Banks (Money Center)) ......... 2,500 23,662 Jefferson Smurfit Group plc (Paper & Forest Products) .................................... 9,000 19,386 ----------- 43,048 ----------- ITALY--2.2% Assicurazioni Generali SpA (Insurance (Life/Health)) ............................... 400 11,112 Banca Nazionale del Lavoro (Banks (Money Center)) ..................................... 3,000 5,810 Benetton Group SpA (Textiles (Apparel)) ........ 500 5,663 Enel SpA (Electric Companies) .................. 2,650 14,936 ENI SpA (Oil) .................................. 3,150 39,490 Fiat SpA (Automobiles) ......................... 400 6,418 La Rinascente SpA (Retail (Department Stores)) . 1,500 5,222 Riunione Adriatica di Sicurta SpA (Insurance (Multi-Line)) ................................ 800 9,424 Sanpaolo IMI SpA (Banks (Money Center)) ........ 2,600 27,895 Societa Assicuratrice Industriale SpA (Insurance (Multi-Line)) ..................... 500 6,255 Telecom Italia Mobile SpA (Telecommunications (Cellular/Wireless)) ......................... 4,900 27,355 Telecom Italia SpA (Telecommunications (Long Distance)) ................................... 2,800 23,933 UniCredito Italiano SpA (Banks (Money Center)) . 1,700 6,826 ----------- 190,339 ----------- JAPAN--7.8% Asahi Glass Co. Ltd. (Chemicals (Specialty)) ... 2,000 11,827 Canon Sales Co., Inc. (Electronics (Component Distributors)) ............................... 1,000 6,852 Canon, Inc. (Electronics (Component Distributors)) ............................... 1,000 34,412 Chiba Bank Ltd. (The) (Banks (Money Center)) ... 2,000 6,531 Dai Nippon Printing (Specialty Printing) ....... 1,000 9,995 Daiio Trust Construction Co. (Engineering & Construction) ................................ 500 7,649 Daiwa House Industry Co. Ltd. (Homebuilding) ... 3,000 17,122 Fuji Heavy Industries (Automobiles) ............ 4,000 17,152 Futaba Corp. (Manufacturing (Diversified)) ..... 300 6,776 Hitachi Ltd. (Manufacturing (Diversified)) ..... 2,000 14,650 Hitachi Maxell Ltd (Household Furnishings & Appliances) .................................. 1,000 12,063 Honda Motor Co. Ltd. (Automobiles) ............. 2,000 79,811 Kubota Corp. (Machinery (Diversified)) ......... 3,000 7,874 Kyocera Corp. (Electronics (Component Distributors)) ............................... 100 6,524 Matsushita Electric Industrial Co. Ltd. (Electronics (Component Distributors)) ....... 2,000 25,683 Mitsubishi Corp. (Distributors (Food & Health)) ..................................... 1,000 6,493 Mitsubishi Electric Corp. (Electronics (Component Distributors)) .................... 2,000 7,737 Mitsubishi Estate Co. (Financial (Diversified)) ............................... 1,000 7,317 Mitsubishi Heavy Industries Ltd. (Machinery (Diversified)) ............................... 4,000 10,682 Mitsubishi Tokyo Financial Group, Inc. (Banks (Money Center)) (b) .......................... 1 6,707 Mitsui Chemicals (Chemicals (Specialty)) ....... 4,000 12,819 Mitsui Fudosan Co. Ltd. (Financial (Diversified)) ............................... 1,000 7,630 Mitsui O.S.K. Lines Ltd. (Shipping) ............ 16,000 32,230 NEC Corp. (Electronics (Component Distributors)) ............................... 1,000 10,201 Nichicon Corp. (Electrical Equipment) .......... 500 5,494 SHARES VALUE ------ ----------- JAPAN--CONTINUED Nichirei Corp. (Agricultural Products) ......... 7,000 $ 15,542 Nippon Telegraph & Telephone Corp. (Telecommunications (Long Distance)) ......... 1 3,258 Nissan Motor Co. Ltd. (Automobiles) ............ 2,000 10,606 Nomura Holdings Inc (Investment Banking/ Brokerage) ................................... 1,000 12,819 Oji Paper Co. Ltd (Paper & Forest Products) .... 5,000 19,876 Sony Corp. (Household Furnishings & Appliances) .................................. 400 18,282 Sumitomo Mitsui Banking Corp. (Banks (Money Center)) ..................................... 2,400 10,163 Sumitomo Trust & Banking Co. Ltd. (The) (Banks (Money Center)) ....................... 4,000 16,237 Takeda Chemical Industries Ltd. (Health Care (Drugs-Major Pharmaceuticals)) ............... 1,000 45,246 Takefuji Corp. (Consumer Finance) .............. 400 28,933 Tanabe Seiyaku Co. Ltd (Health Care (Diversified)) ............................... 1,000 8,912 Tohoku Electric Power Co. (Electric Companies) . 1,900 26,066 Tokyo Electric Power Co., Inc. (The) (Electric Companies) ................................... 1,100 23,417 Toppan Printing Co. Ltd. (Publishing) .......... 1,000 9,225 Toyota Motor Corp. (Automobiles) ............... 1,100 27,865 UFJ Holdings, Inc. (Banks (Money Center)) (b) .. 6 13,231 Uny Co., Ltd. (Retail (Specialty)) ............. 1,000 10,163 Yahama Corp. (Leisure Time (Products)) ......... 2,000 14,802 ----------- 686,874 ----------- NETHERLANDS--3.6% DSM NV (Chemicals (Specialty)) ................. 1,500 54,772 ING Groep NV (Financial (Diversified)) ......... 3,800 96,901 Koninklijke (Royal) Philips Electronics NV (Manufacturing (Diversified)) ................ 1,300 38,637 Koninklijke Vopak NV (Shipping) ................ 400 6,482 Royal Dutch Petroleum Co. (Oil) ................ 1,650 83,593 Wolters Kluwer NV (Publishing) ................. 1,600 36,470 ----------- 316,855 ----------- NEW ZEALAND--0.5% Telecom Corp. of New Zealand Ltd. (Telecommunications (Long Distance)) ......... 22,997 47,880 ----------- NORWAY--0.1% Norsk Hydro ASA (Manufacturing (Diversified)) .. 200 8,384 ----------- PORTUGAL--0.5% Banco Espirito Santo SA (Banks (Major Regional)) ................................... 1,200 15,461 Electricidade de Portugal SA (Electric Companies) ................................... 8,400 18,249 Portucel - Empresa Productora de Pasta e Papel SA (Paper & Forest Products) ........... 8,500 8,930 ----------- 42,640 ----------- SINGAPORE--0.1% Keppel Corp., Ltd. (Financial (Diversified)) ... 4,000 6,152 United Overseas Bank Ltd. (Banks (Major Regional)) ................................... 1,040 7,153 ----------- 13,305 ----------- SPAIN--1.9% Aceralia Corporacion Siderurgica SA (Iron & Steel) ....................................... 800 12,579 Banco Santander Central Hispano SA (Banks (Money Center)) ..................................... 6,200 51,946 Grupo Dragados SA (Engineering & Construction) . 700 9,368 Iberdrola SA (Electric Companies) .............. 2,700 35,147 Repsol YPF SA (Oil & Gas (Refining & Marketing)) 800 11,667 Telefonica SA (Telecommunications (Long Distance)) (b) ............................... 3,200 42,824 ----------- 163,531 ----------- SWEDEN--1.3% Autoliv, Inc. (Auto Parts & Equipment) ......... 950 19,294 Electrolux AB (Household Furnishings & Appliances) .................................. 2,200 32,823 Holmen AB B Shares (Paper & Forest Products) ... 800 18,189 Nordea AB (Banks (Major Regional)) ............. 8,700 46,031 ----------- 116,337 ----------- See Notes to Financial Statements 153 PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES SHARES VALUE ------ ----------- SWITZERLAND--3.0% Holcim Ltd (Construction (Cement & Aggregates)) ................................. 35 $ 7,547 Nestle SA Registered Shares Class B (Foods) .... 230 49,039 Novartis AG Registered Shares (Health Care (Drugs-Major Pharmaceuticals)) ............... 2,700 97,573 Swiss Re Registered Shares (Insurance (Property- Casualty)) ................................... 930 93,544 UBS AG Registered Shares (Financial (Diversified)) ............................... 325 16,404 ----------- 264,107 ----------- UNITED KINGDOM--11.3% Allied Domecq plc (Beverages (Alcoholic)) ...... 2,600 15,411 AstraZeneca plc (Health Care (Drugs-Major Pharmaceuticals)) ............................ 1,200 54,106 AWG plc (Water Utilities) ...................... 2,700 21,220 BAE Systems plc (Aerospace/Defense) ............ 1,500 6,757 BP plc (Oil) ................................... 13,300 103,366 British American Tobacco plc (Tobacco) ......... 4,600 38,998 British Sky Broadcasting plc (Broadcasting (Television, Radio & Cable)) (b) ............. 500 5,501 BT Group plc (Telecommunications (Long Distance)) (b) ............................... 5,100 18,779 Cable & Wireless plc (Telecommunications (Long Distance)) ................................... 1,700 8,177 CGNU plc (Insurance (Multi-Line)) .............. 3,900 47,963 Corus Group plc (Iron & Steel) (b) ............. 7,000 7,335 Diageo plc (Beverages (Alcoholic)) ............. 800 9,140 Electrocomponents plc (Distributors (Food & Health)) (b) ................................. 900 7,021 GlaxoSmithKline plc (Health Care (Drugs-Major Pharmaceuticals)) ............................ 1,846 46,292 HSBC Holdings plc (Financial (Diversified)) .... 1,600 18,769 Imperial Chemical Industries plc (Chemicals (Diversified)) ............................... 3,000 16,548 Lattice Group plc (Natural Gas) ................ 9,500 21,569 Lloyds TSB Group plc (Financial (Diversified)) . 5,700 61,887 Marks and Spencer plc (Retail (Department Stores)) ..................................... 5,400 28,372 Mersey Dock & Harbour Co. plc (Shipping) ....... 2,400 17,762 mm02 plc (Telecommunications (Cellular/ Wireless)) (b) ............................... 5,100 6,421 Morgan Crucible Company plc (Chemicals (Specialty)) ................................. 900 2,515 Persimmon plc (Homebuilding) ................... 2,200 12,319 Rank Group plc (Entertainment) ................. 3,200 10,712 Royal & Sun Alliance Insurance Group plc (Insurance (Multi-Line)) ..................... 11,600 66,645 Royal Bank of Scotland Group plc (Banks (Money Center)) ..................................... 2,700 65,703 Safeway plc (Retail (Food Chains)) ............. 8,257 38,456 Sainsbury (J) plc (Retail (Food Chains)) ....... 2,400 12,784 Shell Transport & Trading Co. plc (Oil) ........ 3,200 21,983 Six Continents plc (Lodging - Hotels) .......... 3,200 31,670 Smith & Nephew plc (Health Care (Medical Products & Supplies)) ........................ 2,000 12,080 Taylor Woodrow plc (Homebuilding) .............. 3,400 8,412 Unilever plc (Foods) ........................... 7,100 58,281 Vodafone Group plc (Telecommunications (Cellular/Wireless)) ......................... 17,400 45,520 Whitbread plc (Restaurants) .................... 600 4,794 Wolseley plc (Distributors (Food & Health)) .... 4,541 38,002 ----------- 991,270 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $4,796,949) .............................. 4,337,958 ----------- TOTAL INVESTMENTS--97.7% (Identified cost $8,996,331) .............................. 8,600,102(a) Other assets and liabilities, net--2.3% ................... 200,214 ----------- NET ASSETS--100.0% .......................................... $ 8,800,316 =========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $624,091 and gross depreciation of $1,020,320 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $8,996,331. (b) Non-income producing. See Notes to Financial Statements 154 PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES INDUSTRY DIVERSIFICATION AS A PERCENTAGE OF TOTAL VALUE OF TOTAL LONG-TERM INVESTMENTS (UNAUDITED) Aerospace/Defense ......................................... 0.4% Agricultural Products ..................................... 0.5 Auto Parts & Equipment .................................... 1.8 Automobiles ............................................... 2.5 Banks (Major Regional) .................................... 5.4 Banks (Money Center) ...................................... 7.8 Beverages (Alcoholic) ..................................... 0.3 Beverages (Non-Alcoholic) ................................. 0.3 Biotechnology ............................................. 0.1 Broadcasting (Television, Radio & Cable) .................. 0.2 Chemicals ................................................. 1.7 Chemicals (Diversified) ................................... 0.9 Chemicals (Specialty) ..................................... 1.6 Communications Equipment .................................. 0.6 Computers (Hardware) ...................................... 1.5 Computers (Networking) .................................... 0.4 Computers (Peripherals) ................................... 0.2 Computers (Software & Services) ........................... 2.2 Construction (Cement & Aggregates) ........................ 0.6 Consumer Finance .......................................... 0.4 Containers & Packaging (Paper) ............................ 1.0 Distributors (Food & Health) .............................. 0.7 Electric Companies ........................................ 3.5 Electrical Equipment ...................................... 2.7 Electronics (Component Distributors) ...................... 1.7 Electronics (Semiconductors) .............................. 0.8 Engineering & Construction ................................ 0.2 Entertainment ............................................. 0.7 Financial (Diversified) ................................... 5.5 Foods ..................................................... 2.1 Hardware & Tools .......................................... 0.2 Health Care (Diversified) ................................. 2.0 Health Care (Drugs-Major Pharmaceuticals) ................. 6.6 Health Care (Managed Care) ................................ 0.3 Health Care (Medical Products & Supplies) ................. 0.3 Homebuilding .............................................. 0.8 Household Furnishings & Appliances ........................ 1.3 Household Products (Non-Durable) .......................... 0.2 Housewares ................................................ 0.3 Insurance (Life/Health) ................................... 1.0% Insurance (Multi-Line) .................................... 3.2 Insurance (Property-Casualty) ............................. 2.3 Insurance Brokers ......................................... 0.3 Investment Banking/Brokerage .............................. 0.7 Iron & Steel .............................................. 0.6 Leisure Time (Products) ................................... 0.2 Lodging - Hotels .......................................... 0.7 Machinery (Diversified) ................................... 0.2 Manufacturing (Diversified) ............................... 1.8 Metals Mining ............................................. 0.5 Natural Gas ............................................... 0.3 Oil ....................................................... 3.3 Oil & Gas (Exploration & Production) ...................... 0.7 Oil & Gas (Refining & Marketing) .......................... 1.6 Oil (International Integrated) ............................ 1.9 Paper & Forest Products ................................... 2.8 Publishing ................................................ 0.7 Railroads ................................................. 1.3 Restaurants ............................................... 0.1 Retail (Building Supplies) ................................ 0.5 Retail (Computers & Electronics) .......................... 0.1 Retail (Department Stores) ................................ 1.1 Retail (Discounters) ...................................... 0.1 Retail (Food Chains) ...................................... 1.0 Retail (General Merchandise) .............................. 1.3 Retail (Specialty) ........................................ 0.1 Retail (Specialty-Apparel) ................................ 0.3 Savings & Loan Companies .................................. 1.0 Services (Computer Systems) ............................... 0.5 Shipping .................................................. 0.7 Specialty Printing ........................................ 0.7 Telecommunications (Cellular/Wireless) .................... 1.1 Telecommunications (Long Distance) ........................ 3.2 Telephone ................................................. 1.5 Textiles (Apparel) ........................................ 0.8 Tobacco ................................................... 1.3 Water Utilities ........................................... 0.2 ------ 100.0% ===== See Notes to Financial Statements 155 PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $8,996,331) ................................................ $8,600,102 Cash ....................................................................................................... 226,761 Foreign currency at value (Identified cost $96,024) ........................................................ 94,736 Receivables Receivable from adviser .................................................................................. 4,458 Net unrealized appreciation on forward foreign currency contracts ........................................ 6,322 Fund shares sold ......................................................................................... 30,532 Dividends ................................................................................................ 11,799 Tax reclaim .............................................................................................. 3,851 Prepaid expenses ........................................................................................... 68 ---------- Total assets ........................................................................................... 8,978,629 ---------- LIABILITIES Payables Investment securities purchased .......................................................................... 49,685 Fund shares repurchased .................................................................................. 76,312 Professional fee ......................................................................................... 26,663 Custodian fee ............................................................................................ 9,350 Printing fee ............................................................................................. 8,353 Financial agent fee ...................................................................................... 3,572 Trustees' fee ............................................................................................ 3,262 Accrued expenses ........................................................................................... 1,116 ---------- Total liabilities ...................................................................................... 178,313 ---------- NET ASSETS ................................................................................................. $8,800,316 ========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ......................................................... $9,201,365 Undistributed net investment income ...................................................................... 2,022 Accumulated net realized loss ............................................................................ (11,898) Net unrealized depreciation .............................................................................. (391,173) ---------- NET ASSETS ................................................................................................. $8,800,316 ========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ........................... 920,478 ========== Net asset value and offering price per share ............................................................... $9.56 =====
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends ................................................................................................ $ 170,795 Interest ................................................................................................. 4,667 Foreign taxes withheld ................................................................................... (10,409) --------- Total investment income ................................................................................ 165,053 --------- EXPENSES Investment advisory fee .................................................................................. 71,879 Financial agent fee ...................................................................................... 42,495 Custodian ................................................................................................ 48,251 Professional ............................................................................................. 29,362 Printing ................................................................................................. 15,761 Trustees ................................................................................................. 9,002 Miscellaneous ............................................................................................ 7,030 --------- Total expenses ......................................................................................... 223,780 Less expenses borne by investment adviser .............................................................. (139,919) --------- Net expenses ........................................................................................... 83,861 --------- NET INVESTMENT INCOME ...................................................................................... 81,192 --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities .......................................................................... 50,019 Net realized loss on foreign currency transactions ....................................................... (3,471) Net change in unrealized appreciation (depreciation) on investments ...................................... (695,133) Net change in unrealized appreciation (depreciation) on foreign currency and foreign currency transactions (2,085) --------- NET LOSS ON INVESTMENTS .................................................................................... (650,670) --------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ....................................................... $(569,478) =========
See Notes to Financial Statements 156 PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES
STATEMENT OF CHANGES IN NET ASSETS FROM INCEPTION YEAR ENDED 11/20/00 TO 12/31/01 12/31/00 ---------- -------------- FROM OPERATIONS Net investment income (loss) ................................................................. $ 81,192 $ 9,308 Net realized gain (loss) ..................................................................... 46,548 (2,572) Net change in unrealized appreciation (depreciation) ......................................... (697,218) 306,045 ---------- ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................................. (569,478) 312,781 ---------- ---------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ........................................................................ (78,519) (9,356) Net realized short-term gains ................................................................ (56,477) -- ---------- ---------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS .................................... (134,996) (9,356) ---------- ---------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (248,659 and 736,929 shares, respectively) ..................... 2,445,801 7,377,050 Net asset value of shares issued from reinvestment of distributions (14,118 and 898 shares, respectively) .............................................................................. 134,996 9,356 Cost of shares repurchased (79,889 and 237 shares, respectively) ............................. (763,447) (2,391) ---------- ---------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS .................................... 1,817,350 7,384,015 ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS ........................................................ 1,112,876 7,687,440 NET ASSETS Beginning of period .......................................................................... 7,687,440 -- ---------- ---------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $2,022 AND $2,820, RESPECTIVELY) .............................................................................. $8,800,316 $7,687,440 ========== ==========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) FROM INCEPTION YEAR ENDED 11/20/00 TO 12/31/01 12/31/00 ---------- -------------- Net asset value, beginning of period ........................................................... $10.42 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ................................................................. 0.09 0.02 Net realized and unrealized gain (loss) ...................................................... (0.80) 0.41 ------ ------ TOTAL FROM INVESTMENT OPERATIONS ........................................................... (0.71) 0.43 ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ......................................................... (0.09) (0.01) Dividends from net realized gains ............................................................ (0.06) -- ------ ------ TOTAL DISTRIBUTIONS ........................................................................ (0.15) (0.01) ------ ------ CHANGE IN NET ASSET VALUE ...................................................................... (0.86) 0.42 ------ ------ NET ASSET VALUE, END OF PERIOD ................................................................. $ 9.56 $10.42 ====== ====== Total return ................................................................................... (6.84)% 4.35%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) .......................................................... $8,800 $7,687 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(3) ........................................................................ 1.05% 1.05%(1) Net investment income ........................................................................ 1.02% 1.12%(1) Portfolio turnover ............................................................................. 24% 0%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 2.80% and 5.41% for the periods ended December 31, 2001 and 2000, respectively.
See Notes to Financial Statements 157 PHOENIX-SANFORD BERNSTEIN MID-CAP VALUE SERIES INVESTOR PROFILE This Fund is appropriate for investors seeking long-term capital appreciation. Current income is a secondary objective of this series. INVESTMENT ADVISER'S REPORT In 2001, the Phoenix-Sanford Bernstein Mid Cap Value Series returned 22.98% strongly outperforming the Russell 2500 Index's(1) 1.22% return. Value was the place to be in 2001, notwithstanding weakness in the fourth quarter. Smaller-cap stocks topped larger-caps in both the fourth quarter and the full year. On balance, the Russell 2500 Index rose 20% in the fourth quarter and ended the year up roughly 1%. Meager gains, to be sure, but well ahead of the larger-cap market's 12% decline for the year, as measured by the S&P 500 Index(2). The portfolio's emphasis on value-oriented stocks contributed significantly to the premium. This was especially true within the technology sector, where our avoidance of beaten-down technology stocks boosted performance; our underweight of the sector also helped. Pro-cyclicals--industrial commodities, for example--performed very well this year and the portfolio's emphasis on these stocks contributed significantly to the premium. Moreover, our industrial commodities stocks fared even better than the market, boosting relative returns; our overweight of the sector also contributed. In the health care sector, our holdings, few though they were, outperformed; both, strong performance by our holdings and our underweighted position in the sector contributed to relative returns. The absence of retail and restaurant stocks in the portfolio as well as our underexposure to financial-services stocks, particularly certain types of Real Estate Investment Trusts (REITs), somewhat detracted from these strong gains. OUTLOOK Holding to our value discipline enabled us to capture value's strong performance this year. In fact, smaller-cap value was the best-performing asset class for the second year in a row. Despite weakness in the fourth quarter, we believe opportunities still abound for value stocks. And smaller-cap stocks remain cheap relative to large caps. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Mid-Cap Value Series Russell 2500 Index(1) S&P 500 Index (2) 3/2/98 $10,000.00 $10,000.00 $10,000.00 12/31/98 8,862.77 9,494.21 11,895.30 12/31/99 7,951.45 11,786.80 14,409.40 12/29/00 9,294.55 12,289.90 13,085.60 12/31/01 11,430.80 12,439.90 11,531.70 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 3/2/98 TO 1 YEAR 12/31/01 - -------------------------------------------------------------------------------- Mid-Cap Value Series 22.98% 3.55% - -------------------------------------------------------------------------------- Russell 2500 Index(1) 1.22% 5.86% - -------------------------------------------------------------------------------- S&P 500 Index(2) (11.87)% 3.79% - -------------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 3/2/98 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. (1) The Russell 2500 Index is an unmanaged, commonly used measure of the performance of the 2500 smallest companies in the Russell 3000 Index. (2) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 158 PHOENIX-SANFORD BERNSTEIN MID-CAP VALUE SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE ------ ----------- COMMON STOCKS--96.7% AGRICULTURAL PRODUCTS--1.7% Corn Products International, Inc. .................. 24,000 $ 846,000 ----------- AUTO PARTS & EQUIPMENT--7.8% Borgwarner, Inc. ................................... 16,500 862,125 Dana Corp. ......................................... 18,000 249,840 Genuine Parts Co. .................................. 17,900 656,930 Goodyear Tire & Rubber Co. (The) ................... 20,900 497,629 Lear Corp. (b) ..................................... 19,000 724,660 Modine Manufacturing Co. ........................... 35,000 816,550 ----------- 3,807,734 ----------- BANKS (MAJOR REGIONAL)--2.3% Huntington Bancshares, Inc. ........................ 46,000 790,740 SouthTrust Corp. ................................... 13,400 330,578 ----------- 1,121,318 ----------- BANKS (REGIONAL)--8.2% Bancorpsouth, Inc. ................................. 40,500 672,300 Commercial Federal Corp. ........................... 29,000 681,500 Hibernia Corp. Class A ............................. 22,000 391,380 Pacific Century Financial Corp. .................... 30,300 784,467 UnionBanCal Corp. .................................. 18,000 684,000 Whitney Holding Corp. .............................. 17,000 745,450 ----------- 3,959,097 ----------- CHEMICALS (DIVERSIFIED)--1.1% FMC Corp. (b) ...................................... 8,700 517,650 ----------- CHEMICALS (SPECIALTY)--3.0% Crompton Corp. ..................................... 85,000 765,000 Cytec Industries, Inc. (b) ......................... 26,000 702,000 ----------- 1,467,000 ----------- COMMUNICATIONS EQUIPMENT--2.7% Andrew Corp. (b) ................................... 25,300 553,817 Tellabs, Inc. (b) .................................. 51,500 770,440 ----------- 1,324,257 ----------- CONTAINERS & PACKAGING (PAPER)--1.0% Temple-Inland, Inc. ................................ 8,500 482,205 ----------- CONTAINERS (METAL & GLASS)--1.0% Owens-Illinois, Inc. (b) ........................... 47,000 469,530 ----------- DISTRIBUTORS (FOOD & HEALTH)--1.3% SUPERVALU, Inc. .................................... 27,800 614,936 ----------- ELECTRIC COMPANIES--13.8% Alliant Energy Corp. ............................... 10,200 309,672 Cinergy Corp. ...................................... 16,900 564,967 Consolidated Edison, Inc. .......................... 11,000 443,960 Northeast Utilities ................................ 35,000 617,050 NSTAR .............................................. 16,000 717,600 OGE Energy Corp. ................................... 30,000 692,400 PNM Resources, Inc. ................................ 27,000 754,650 Potomac Electric Power Co. ......................... 31,000 699,670 Puget Energy, Inc. ................................. 29,000 634,810 Sierra Pacific Resources ........................... 45,000 677,250 WPS Resources Corp. ................................ 16,500 603,075 ----------- 6,715,104 ----------- SHARES VALUE ------ ----------- ELECTRICAL EQUIPMENT--2.0% Cooper Industries, Inc. ............................ 18,000 $ 628,560 Vishay Intertechnology, Inc. (b) ................... 17,678 344,721 ----------- 973,281 ----------- ELECTRONICS (COMPONENT DISTRIBUTORS)--2.4% Arrow Electronics, Inc. (b) ........................ 18,900 565,110 Avnet, Inc. ........................................ 22,800 580,716 ----------- 1,145,826 ----------- ELECTRONICS (SEMICONDUCTORS)--1.4% Adaptec, Inc. (b) .................................. 48,000 696,000 ----------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--0.8% Beckman Coulter, Inc. .............................. 8,300 367,690 ----------- HOMEBUILDING--5.6% Centex Corp. ....................................... 15,500 884,895 KB Home ............................................ 24,000 962,400 Pulte Homes, Inc. .................................. 20,000 893,400 ----------- 2,740,695 ----------- HOUSEHOLD FURNISHINGS & APPLIANCES--1.1% Leggett & Platt, Inc. .............................. 23,200 533,600 ----------- INSURANCE (PROPERTY-CASUALTY)--1.4% Fidelity National Financial, Inc. .................. 27,000 669,600 ----------- IRON & STEEL--1.5% Nucor Corp. ........................................ 14,000 741,440 ----------- LODGING - HOTELS--1.8% Starwood Hotels & Resorts Worldwide, Inc. .......... 30,000 895,500 ----------- MANUFACTURING (DIVERSIFIED)--5.4% Eaton Corp. ........................................ 10,500 781,305 Harsco Corp. ....................................... 16,500 565,950 Johnson Controls, Inc. ............................. 5,000 403,750 Parker-Hannifin Corp. .............................. 18,500 849,335 ----------- 2,600,340 ----------- MANUFACTURING (SPECIALIZED)--3.2% Lincoln Electric Holdings, Inc. .................... 34,000 830,960 Reliance Steel & Aluminum Co. ...................... 28,000 735,000 ----------- 1,565,960 ----------- METAL FABRICATORS--1.0% Kennametal, Inc. ................................... 12,100 487,267 ----------- OIL (DOMESTIC INTEGRATED)--1.1% Amerada Hess Corp. ................................. 4,000 250,000 Occidental Petroleum Corp. ......................... 10,500 278,565 ----------- 528,565 ----------- OIL & GAS (DRILLING & EQUIPMENT)--2.0% Rowan Cos., Inc. (b) ............................... 50,000 968,500 ----------- OIL & GAS (REFINING & MARKETING)--1.7% Valero Energy Corp. ................................ 21,000 800,520 ----------- PAPER & FOREST PRODUCTS--3.2% Mead Corp. (The) ................................... 16,800 518,952 Smurfit-Stone Container Corp. (b) .................. 31,600 504,652 Westvaco Corp. ..................................... 18,100 514,945 ----------- 1,538,549 ----------- See Notes to Financial Statements 159 PHOENIX-SANFORD BERNSTEIN MID-CAP VALUE SERIES SHARES VALUE ------ ----------- RAILROADS--0.6% Norfolk Southern Corp. ............................. 15,400 $ 282,282 ----------- REITS--8.3% Arden Realty, Inc. ................................. 29,000 768,500 Avalonbay Communities, Inc. ........................ 10,800 510,948 Duke Realty Corp. .................................. 27,000 656,910 Liberty Property Trust ............................. 22,000 656,700 Mack-Cali Realty Corp. ............................. 26,000 806,520 Post Properties, Inc. .............................. 18,000 639,180 ----------- 4,038,758 ----------- RETAIL (COMPUTERS & ELECTRONICS)--1.2% Tech Data Corp. (b) ................................ 14,000 605,920 ----------- SAVINGS & LOAN COMPANIES--1.2% Washington Federal, Inc. ........................... 22,190 572,058 ----------- SHIPPING--2.1% Royal Caribbean Cruises Ltd. ....................... 63,000 1,020,600 ----------- TEXTILES (APPAREL)--2.4% Jones Apparel Group, Inc. (b) ...................... 23,000 762,910 V. F. Corp. ........................................ 10,500 409,605 ----------- 1,172,515 ----------- TRUCKS & PARTS--1.4% Paccar, Inc. ....................................... 10,500 689,010 ----------- TOTAL COMMON STOCKS (Identified cost $41,205,759) ................................. 46,959,307 ----------- TOTAL LONG-TERM INVESTMENTS--96.7% (Identified cost $41,205,759) ................................. 46,959,307 ----------- PAR VALUE (000) VALUE ------ ----------- SHORT-TERM OBLIGATIONS--3.2% MONEY MARKET MUTUAL FUNDS--3.2% SSgA Money Market Fund (1.89% seven day effective yield) ........................................... $1,526 $ 1,525,718 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $1,525,718) .................................. 1,525,718 ----------- TOTAL INVESTMENTS--99.9% (Identified cost $42,731,477) ................................. 48,485,025(a) Other assets and liabilities, net--0.1% ....................... 71,209 ----------- NET ASSETS--100.0% .............................................. $48,556,234 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $6,605,689 and gross depreciation of $859,962 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $42,739,298. (b) Non-income producing. See Notes to Financial Statements 160 PHOENIX-SANFORD BERNSTEIN MID-CAP VALUE SERIES
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $42,731,477) ............................................ $48,485,025 Receivables Dividends and interest ................................................................................ 130,747 Fund shares sold ...................................................................................... 66,213 Prepaid expenses ........................................................................................ 218 ----------- Total assets ........................................................................................ 48,682,203 ----------- LIABILITIES Payables Fund shares repurchased ............................................................................... 32,427 Investment advisory fee ............................................................................... 35,376 Professional fee ...................................................................................... 27,499 Printing fee .......................................................................................... 19,879 Financial agent fee ................................................................................... 5,834 Trustees' fee ......................................................................................... 3,262 Accrued expenses ........................................................................................ 1,692 ----------- Total liabilities ................................................................................... 125,969 ----------- NET ASSETS .............................................................................................. $48,556,234 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ...................................................... $42,430,282 Accumulated net realized gain ......................................................................... 372,404 Net unrealized appreciation ........................................................................... 5,753,548 ----------- NET ASSETS .............................................................................................. $48,556,234 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ........................ 4,424,437 =========== Net asset value and offering price per share ............................................................ $10.97 ======
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends ............................................................................................. $ 810,620 Interest .............................................................................................. 53,565 ---------- Total investment income ............................................................................. 864,185 ---------- EXPENSES Investment advisory fee ............................................................................... 311,051 Financial agent fee ................................................................................... 59,568 Professional .......................................................................................... 30,071 Printing .............................................................................................. 25,473 Custodian ............................................................................................. 15,627 Trustees .............................................................................................. 8,437 Miscellaneous ......................................................................................... 6,994 ---------- Total expenses ...................................................................................... 457,221 Less expenses borne by investment adviser ........................................................... (101,741) Custodian fees paid indirectly ...................................................................... (6) ---------- Net expenses ........................................................................................ 355,474 ---------- NET INVESTMENT INCOME ................................................................................... 508,711 ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities ....................................................................... 1,675,909 Net change in unrealized appreciation (depreciation) on investments ................................... 4,436,626 ---------- NET GAIN ON INVESTMENTS ................................................................................. 6,112,535 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................................................... $6,621,246 ==========
See Notes to Financial Statements 161 PHOENIX-SANFORD BERNSTEIN MID-CAP VALUE SERIES
STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ----------- ----------- FROM OPERATIONS Net investment income (loss) ................................................................. $ 508,711 $ 97,829 Net realized gain (loss) ..................................................................... 1,675,909 47,405 Net change in unrealized appreciation (depreciation) ......................................... 4,436,626 1,852,402 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................................. 6,621,246 1,997,636 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ........................................................................ (475,205) (98,546) Net realized short-term gains ................................................................ (11,465) -- Net realized long-term gains ................................................................. (204,655) -- ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS .................................... (691,325) (98,546) ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (3,715,054 and 1,012,458 shares, respectively) ................. 36,940,985 8,123,987 Net asset value of shares issued from reinvestment of distributions (64,377 and 11,014 shares, respectively) .............................................................................. 691,325 98,546 Cost of shares repurchased (981,403 and 501,634 shares, respectively) ........................ (9,764,166) (3,998,845) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS .................................... 27,868,144 4,223,688 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS ........................................................ 33,798,065 6,122,778 NET ASSETS Beginning of period .......................................................................... 14,758,169 8,635,391 ----------- ----------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $0 AND $158, RESPECTIVELY) .............................................................................. $48,556,234 $14,758,169 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) YEAR ENDED FROM DECEMBER 31, INCEPTION -------------------------- 3/2/98 TO 2001 2000 1999 12/31/98 ------ ------ ------ ----------- Net asset value, beginning of period ........................................ $ 9.07 $ 7.82 $ 8.84 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .............................................. 0.13 0.06 0.11 0.03(4) Net realized and unrealized gain (loss) ................................... 1.95 1.25 (1.02) (1.16) ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ........................................ 2.08 1.31 (0.91) (1.13) ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ........................................ (0.13) (0.06) (0.11) (0.03) Dividends from net realized gains ........................................... (0.05) -- -- -- ------ ------ ------ ------ TOTAL DISTRIBUTIONS ..................................................... (0.18) (0.06) (0.11) (0.03) ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ................................................... 1.90 1.25 (1.02) (1.16) ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD .............................................. $10.97 $ 9.07 $ 7.82 $8.84 ------ ------ ------ ------ Total return ................................................................ 22.98% 16.89% (10.28)% (11.37)%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ....................................... $48,556 $14,758 $8,635 $7,896 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(3) ..................................................... 1.20%(5) 1.20%(5) 1.20% 1.20%(1) Net investment income . ................................................... 1.72% 0.95% 1.40% 0.52%(1) Portfolio turnover rate ..................................................... 28% 128% 29% 21%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets (including custody credits) would have been 1.54%, 2.39%, 2.58% and 2.77% for the periods ended December 31, 2001, 2000, 1999 and 1998, respectively. (4) Computed using average shares outstanding. (5) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 162 PHOENIX-SANFORD BERNSTEIN SMALL-CAP VALUE SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking long-term capital appreciation by investing primarily in small-capitalization stocks that appear to be undervalued. Current income is a secondary objective of this series. INVESTMENT ADVISER'S REPORT In 2001, the Phoenix-Sanford Bernstein Small Cap Value Series returned 15.76% strongly outperforming the Russell 2000 Value Index's(1) 14.02% return. Value was the place to be in 2001, notwithstanding weakness in the fourth quarter. Smaller-cap stocks topped larger-caps in both the fourth quarter and the full year. On balance, the Russell 2000 gained over 20% in the fourth quarter, which put it back in positive territory for the year with a 2.5% gain. Meager gains, to be sure, but well ahead of the broad market's 11.87% decline for the year, as measured by the S&P 500 Index(2). The portfolio's emphasis on value-oriented stocks contributed significantly to the premium. This was especially true within the technology and utilities sectors, where our avoidance of beaten-down tech and telecom stocks boosted performance. In the health care sector, our holdings, few though they were, outperformed the market by wide margins; both, our underweighted position in the sector and strong performance by our holdings contributed to relative returns. In producer durables, our overweight position and strong stock selection contributed to our premium. The absence of retail and restaurant stocks in the portfolio as well as our underexposure to financial-services stocks, particularly certain types of Real Estate Investment Trusts (REITs), somewhat detracted from these strong gains. OUTLOOK Holding to our value discipline enabled us to capture value's strong performance this year. In fact, small-cap value was the best-performing asset class for the second year in a row. Despite weakness in the fourth quarter, we believe opportunities still abound for value stocks. And smaller-cap stocks remain cheap relative to large caps. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Small-Cap Value Series Russell 2000 Value Index(1) S&P 500 Index(2) 11/20/00 $10,000.00 $10,000.00 $10,000.00 12/29/00 10,643.80 10,944.60 9,844.46 12/31/01 12,321.00 12,479.50 8,675.44 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 11/20/00 TO 1 YEAR 12/31/01 - -------------------------------------------------------------------------------- Small-Cap Value Series 15.76% 20.64% - -------------------------------------------------------------------------------- Russell 2000 Value Index(1) 14.02% 22.03% - -------------------------------------------------------------------------------- S&P 500 Index(2) (11.87)% (11.99)% - -------------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 11/20/00 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. (1) The Russell 2000 Value Index is an unmanaged commonly used measure of total return performance of small-capitalization value-oriented stocks. (2) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 163 PHOENIX-SANFORD BERNSTEIN SMALL-CAP VALUE SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE ------ ----------- COMMON STOCKS--94.6% AEROSPACE/DEFENSE--1.2% Precision Castparts Corp. .......................... 7,100 $ 200,575 ----------- AGRICULTURAL PRODUCTS--1.5% Corn Products International, Inc. .................. 7,500 264,375 ----------- AUTO PARTS & EQUIPMENT--2.3% Borgwarner, Inc. ................................... 4,400 229,900 Modine Manufacturing Co. ........................... 7,000 163,310 ----------- 393,210 ----------- BANKS (REGIONAL)--5.5% Bancorpsouth, Inc. ................................. 10,400 172,640 Commercial Federal Corp. ........................... 3,200 75,200 GBC Bancorp ........................................ 7,600 224,200 Hibernia Corp. Class A ............................. 5,300 94,287 Pacific Century Financial Corp. .................... 10,500 271,845 Whitney Holding Corp. .............................. 2,300 100,855 ----------- 939,027 ----------- BUILDING MATERIALS--0.3% Hexcel Corp. (b) ................................... 18,500 56,980 ----------- CHEMICALS (DIVERSIFIED)--0.9% FMC Corp. (b) ...................................... 2,600 154,700 ----------- CHEMICALS (SPECIALTY)--3.4% Crompton Corp. ..................................... 21,200 190,800 Cytec Industries, Inc. (b) ......................... 7,500 202,500 Millennium Chemicals, Inc. ......................... 1,900 23,940 Minerals Technologies, Inc. ........................ 3,700 172,568 ----------- 589,808 ----------- COMMUNICATIONS EQUIPMENT--0.8% Andrew Corp. (b) ................................... 6,600 144,474 ----------- COMPUTERS (PERIPHERALS)--1.1% Hutchinson Technology, Inc. (b) .................... 6,000 139,320 Quantum Corp. - DLT & Storage Systems (b) .......... 5,000 49,250 ----------- 188,570 ----------- CONSTRUCTION (CEMENT & AGGREGATES)--1.4% Texas Industries, Inc. ............................. 6,500 239,850 ----------- CONSUMER (JEWELRY, NOVELTIES & GIFTS)--0.5% Russ Berrie & Co., Inc. ............................ 2,800 84,000 ----------- CONTAINERS & PACKAGING (PAPER)--2.0% Playtex Products, Inc. (b) ......................... 20,100 195,975 Rock-Tenn Co. Class A .............................. 10,000 144,000 ----------- 339,975 ----------- CONTAINERS (METAL & GLASS)--0.8% Owens-Illinois, Inc. (b) ........................... 13,700 136,863 ----------- ELECTRIC COMPANIES--11.0% Alliant Energy Corp. ............................... 4,100 124,476 Central Vermont Public Service Corp. ............... 9,100 151,970 Empire District Electric Co. (The) ................. 11,000 231,000 Northeast Utilities ................................ 11,000 193,930 NSTAR .............................................. 5,300 237,705 OGE Energy Corp. ................................... 8,600 198,488 PNM Resources, Inc. ................................ 7,800 218,010 Sierra Pacific Resources ........................... 14,600 219,730 Wisconsin Energy Corp. ............................. 2,000 45,120 WPS Resources Corp. ................................ 7,500 274,125 ----------- 1,894,554 ----------- SHARES VALUE ------ ----------- ELECTRICAL EQUIPMENT--2.2% KEMET Corp. (b) .................................... 12,500 $ 221,875 Vishay Intertechnology, Inc. (b) ................... 8,445 164,678 ----------- 386,553 ----------- ELECTRONICS (COMPONENT DISTRIBUTORS)--1.2% Avnet, Inc. ........................................ 7,800 198,666 ----------- ELECTRONICS (SEMICONDUCTORS)--2.7% Adaptec, Inc. (b) .................................. 20,500 297,250 Supertex, Inc. (b) ................................. 9,400 164,594 ----------- 461,844 ----------- FOODS--1.0% Interstate Bakeries Corp. .......................... 6,800 164,424 ----------- GAMING, LOTTERY & PARI-MUTUEL COMPANIES--0.5% Pinnacle Entertainment, Inc. (b) ................... 13,000 78,390 ----------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--2.2% CONMED Corp. (b) ................................... 11,100 221,556 Mentor Corp. ....................................... 5,300 151,368 ----------- 372,924 ----------- HOMEBUILDING--4.8% KB Home ............................................ 7,000 280,700 Pulte Homes, Inc. .................................. 6,400 285,888 Standard Pacific Corp. ............................. 10,600 257,792 ----------- 824,380 ----------- HOUSEWARES--0.6% Oneida Ltd. ........................................ 8,000 103,600 ----------- INSURANCE (LIFE/HEALTH)--0.9% American National Insurance Co. .................... 1,800 151,380 ----------- INSURANCE (PROPERTY-CASUALTY)--1.0% Harleysville Group, Inc. ........................... 7,400 176,786 ----------- IRON & STEEL--2.1% Commercial Metals Co. .............................. 5,500 192,390 UCAR International, Inc. (b) ....................... 16,500 176,550 ----------- 368,940 ----------- LODGING - HOTELS--1.4% Prime Hospitality Corp. (b) ........................ 22,500 248,625 ----------- MACHINERY (DIVERSIFIED)--3.6% Curtiss-Wright Corp. ............................... 1,000 47,750 Gardner Denver, Inc. (b) ........................... 10,000 223,200 Moog, Inc. Class A (b) ............................. 6,750 147,150 Terex Corp. (b) .................................... 12,000 210,480 ----------- 628,580 ----------- MANUFACTURING (DIVERSIFIED)--3.7% Alltrista Corp. (b) ................................ 3,000 47,100 Esterline Technologies Corp. (b) ................... 13,200 211,332 Harsco Corp. ....................................... 5,900 202,370 Penn Engineering & Manufacturing Corp. ............. 11,000 184,250 ----------- 645,052 ----------- MANUFACTURING (SPECIALIZED)--6.7% Briggs & Stratton Corp. ............................ 4,550 194,285 CTS Corp. .......................................... 13,400 213,060 JLG Industries, Inc. ............................... 16,000 170,400 Lincoln Electric Holdings, Inc. .................... 4,250 103,870 Regal Beloit Corp. ................................. 11,800 257,240 Reliance Steel & Aluminum Co. ...................... 8,300 217,875 ----------- 1,156,730 ----------- See Notes to Financial Statements 164 PHOENIX-SANFORD BERNSTEIN SMALL-CAP VALUE SERIES SHARES VALUE ------ ----------- METAL FABRICATORS--3.7% Kennametal, Inc. ................................... 3,700 $ 148,999 RTI International Metals, Inc. (b) ................. 28,500 283,575 Wolverine Tube, Inc. (b) ........................... 18,000 204,300 ----------- 636,874 ----------- NATURAL GAS--0.5% Southwestern Energy Co. (b) ........................ 8,500 88,400 ----------- OIL (INTERNATIONAL INTEGRATED)--1.3% Tesoro Petroleum Corp. (b) ......................... 17,500 229,425 ----------- OIL & GAS (DRILLING & EQUIPMENT)--3.3% Rowan Cos., Inc. (b) ............................... 15,000 290,550 Seitel, Inc. (b) ................................... 20,400 277,440 ----------- 567,990 ----------- OIL & GAS (REFINING & MARKETING)--1.9% Valero Energy Corp. ................................ 8,500 324,020 ----------- PAPER & FOREST PRODUCTS--0.6% Rayonier, Inc. ..................................... 2,000 100,940 ----------- REITS--7.5% Arden Realty, Inc. ................................. 7,100 188,150 Avalonbay Communities, Inc. ........................ 1,500 70,965 Duke Realty Corp. .................................. 5,700 138,681 Eastgroup Properties, Inc. ......................... 2,000 46,140 FelCor Lodging Trust, Inc. ......................... 13,400 223,914 Liberty Property Trust ............................. 4,700 140,295 Mack-Cali Realty Corp. ............................. 6,200 192,324 Post Properties, Inc. .............................. 3,600 127,836 RFS Hotel Investors, Inc. .......................... 4,000 45,520 Summit Properties, Inc. ............................ 4,900 122,598 ----------- 1,296,423 ----------- RETAIL (BUILDING SUPPLIES)--1.1% Hughes Supply, Inc. ................................ 6,300 194,481 ----------- SAVINGS & LOAN COMPANIES--1.0% Washington Federal, Inc. ........................... 6,890 177,624 ----------- SHIPPING--1.4% Alexander & Baldwin, Inc. .......................... 4,900 130,830 Royal Caribbean Cruises Ltd. ....................... 6,300 102,060 ----------- 232,890 ----------- TEXTILES (APPAREL)--1.2% Kellwood Co. ....................................... 6,100 146,461 Russell Corp ....................................... 3,500 52,535 ----------- 198,996 ----------- TEXTILES (SPECIALTY)--1.1% Wellman, Inc. ...................................... 12,000 185,880 ----------- TOBACCO--1.6% Schweitzer-Mauduit International, Inc. ............. 11,500 273,125 ----------- TRUCKS & PARTS--1.1% Oshkosh Truck Corp. ................................ 4,000 195,000 ----------- TOTAL COMMON STOCKS (Identified cost $15,074,990) ................................ 16,295,903 ----------- TOTAL LONG-TERM INVESTMENTS--94.6% (Identified cost $15,074,990) ................................ 16,295,903 ----------- PAR VALUE (000) VALUE ----- ----------- SHORT-TERM OBLIGATIONS--4.9% MONEY MARKET MUTUAL FUNDS--4.9% SSgA Money Market Fund (1.89% seven day effective yield) ................................. $848 $ 848,384 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $848,384) .................................... 848,384 ----------- TOTAL INVESTMENTS--99.5% (Identified cost $15,923,374) ................................. 17,144,287(a) Other assets and liabilities, net--0.5% ....................... 87,341 ----------- NET ASSETS--100.0% .............................................. $17,231,628 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $1,807,272 and gross depreciation of $608,799 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $15,945,814. (b) Non-income producing. See Notes to Financial Statements 165 PHOENIX-SANFORD BERNSTEIN SMALL-CAP VALUE SERIES
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $15,923,374) ............................................ $17,144,287 Cash .................................................................................................... 68,811 Receivables Fund shares sold ...................................................................................... 52,762 Dividends and interest ................................................................................ 25,276 Investment securities sold ............................................................................ 15,703 Prepaid expenses ........................................................................................ 63 ----------- Total assets ........................................................................................ 17,306,902 ----------- LIABILITIES Payables Fund shares repurchased ............................................................................... 26,150 Professional fee ...................................................................................... 25,309 Printing fee .......................................................................................... 12,000 Financial agent fee ................................................................................... 3,981 Trustees' fee ......................................................................................... 3,262 Investment advisory fee ............................................................................... 903 Accrued expenses ........................................................................................ 3,669 ----------- Total liabilities ................................................................................... 75,274 ----------- NET ASSETS .............................................................................................. $17,231,628 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ...................................................... $16,009,680 Accumulated net realized gain ......................................................................... 1,035 Net unrealized appreciation ........................................................................... 1,220,913 ----------- NET ASSETS .............................................................................................. $17,231,628 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ........................ 1,425,927 =========== Net asset value and offering price per share ............................................................ $12.08 ======
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends ............................................................................................. $ 192,805 Interest .............................................................................................. 20,603 Foreign tax withheld .................................................................................. (114) ---------- Total investment income ............................................................................. 213,294 ---------- EXPENSES Investment advisory fee ............................................................................... 96,436 Financial agent fee ................................................................................... 44,524 Professional .......................................................................................... 25,743 Custodian ............................................................................................. 18,288 Printing .............................................................................................. 14,708 Trustees .............................................................................................. 8,438 Miscellaneous ......................................................................................... 5,837 ---------- Total expenses ...................................................................................... 213,974 Less expenses borne by investment adviser ........................................................... (103,699) Custodian fees paid indirectly ...................................................................... (69) ---------- Net expenses ........................................................................................ 110,206 ---------- NET INVESTMENT INCOME ................................................................................... 103,088 ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities ....................................................................... 190,000 Net change in unrealized appreciation (depreciation) on investments ................................... 1,063,580 ---------- NET GAIN ON INVESTMENTS ................................................................................. 1,253,580 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................................................... $1,356,668 ==========
See Notes to Financial Statements 166 PHOENIX-SANFORD BERNSTEIN SMALL-CAP VALUE SERIES
STATEMENT OF CHANGES IN NET ASSETS FROM INCEPTION YEAR ENDED 11/20/00 TO 12/31/01 12/31/00 ----------- -------------- FROM OPERATIONS Net investment income (loss) ................................................................ $ 103,088 $ 6,974 Net realized gain (loss) .................................................................... 190,000 (2,497) Net change in unrealized appreciation (depreciation) ........................................ 1,063,580 157,333 ----------- ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................. 1,356,668 161,810 ----------- ---------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ....................................................................... (94,835) (6,815) Net realized short-term gains ............................................................... (193,131) -- ----------- ---------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ................................... (287,966) (6,815) ----------- ---------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (1,422,543 and 253,024 shares, respectively) .................. 16,278,755 2,531,258 Net asset value of shares issued from reinvestment of distributions (23,750 and 637 shares, respectively) ............................................................................. 287,966 6,815 Cost of shares repurchased (273,953 and 74 shares, respectively) ............................ (3,096,136) (727) ----------- ---------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................... 13,470,585 2,537,346 ----------- ---------- NET INCREASE (DECREASE) IN NET ASSETS ....................................................... 14,539,287 $2,692,341 NET ASSETS Beginning of period ......................................................................... 2,692,341 -- ----------- ---------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $0 AND $0) ........... $17,231,628 $2,692,341 =========== ==========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) FROM INCEPTION YEAR ENDED 11/20/00 TO 12/31/01 12/31/00 ----------- -------------- Net asset value, beginning of period .......................................................... $10.62 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ................................................................ 0.07 0.03 Net realized and unrealized gain ............................................................ 1.59 0.62 ------ ------ TOTAL FROM INVESTMENT OPERATIONS .......................................................... 1.66 0.65 ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ........................................................ (0.07) (0.03) Dividends from net realized gains ........................................................... (0.13) -- ------ ------ TOTAL DISTRIBUTIONS ....................................................................... (0.20) (0.03) ------ ------ CHANGE IN NET ASSET VALUE ..................................................................... 1.46 0.62 ------ ------ NET ASSET VALUE, END OF PERIOD ................................................................ $12.08 $10.62 ====== ====== Total return .................................................................................. 15.76% 6.44%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ......................................................... $17,232 $2,692 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(3) ....................................................................... 1.20%(4) 1.20%(1) Net investment income (loss) ................................................................ 1.12% 2.71%(1) Portfolio turnover ............................................................................ 18% 1%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 2.33% and 13.52% for the periods ended December 31, 2001 and 2000, respectively. (4) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 167 PHOENIX-SENECA MID-CAP GROWTH SERIES INVESTOR PROFILE The Fund is appropriate for investors seeking long-term capital appreciation. INVESTMENT ADVISER'S REPORT For the 12 months ended December 31, 2001, Phoenix-Seneca Mid-Cap Growth Edge Series returned -25.28% compared with a return of -20.15% for the Russell MidCap(R) Growth Index(1) and 0.49% for the S&P MidCap 400 Index.(3) The year 2001 was extraordinary in its harshness in every regard, and for investors, it deepened the misery of 2000. It is rare for the U.S. equity markets to post two consecutive annual declines, but virtually all major stock market averages fell in each of the last two years. Despite a remarkably strong rally in the fourth quarter of 2001, the broadest measure of U.S. stock performance, the Wilshire 5000 Index, registered a double-digit percentage decline for the year.* In hindsight, the reasons for the sharp sell off are clear: the bursting of the tech bubble and the dramatic economic slowdown from the heady pace of the late 1990s. We had hoped the inevitable Internet crash could occur without devastating the economy, but the interconnections between the "new" and the "old" economies were substantial. As upstarts imploded, they took a chunk out of the revenue streams of established companies throughout the economy, from technology to real estate to retailing. Any company that had relied on the dot coms and telecoms to continue spending on equipment, space, supplies and services was disappointed. Easy money, overinvestment, overleverage, and overcapacity in the "new" economy led to a sharp downturn in the entire economy. Groups as far removed from the technology bubble as pharmaceuticals and utilities fell hard. Growth stocks were especially beaten down as multiples deflated and new growth industries such as the Internet and alternative telecommunications fizzled. "Value" investing, which is variously defined as investing in asset rich companies, companies with low P/E multiples, or turnaround situations, lost less during the bear market. As "growth" investors, we have not been spared. Our valuation disciplines and risk controls, however, bolstered our performance during the bear market. Stock selection in the health-care sector was the dominant positive contributor to performance in 2001. The Seneca stocks, led by Tenet Healthcare, returned over 8% versus those in the Russell MidCap(R) Growth Index at -11.36%. The utilities were another bright spot in the portfolio in 2001. The Seneca stocks outperformed those in the benchmark six of the nine months we were invested in them. We also tended to be overweighted during the months that the sector helped index performance. Mirant Corp., up 58.7% for the year, was the biggest contributor. The Seneca capital goods stocks returned 5% for the year versus a -7% return for those in the index. The underperformance of the portfolio's consumer cyclical stocks was the biggest drag on performance. Crown Castle, a cellular tower company, and Cendant Corp. were two of the bottom 10 stocks by contribution for the year. Cendant, with its hotel and rental car businesses, was the only stock in the portfolio directly affected by the September 11th terrorist attacks. The overweight in the portfolio in communications services stocks hurt performance, as did the performance of Seneca's only two holdings in this group, Nextel Partners and Powerwave Technologies. We were out of both positions before year-end. Several significant earnings disappointments in the technology sector had a negative impact, particularly Waters Corp., which dragged down other Seneca holdings, PerkinElmer and Thermoelectron. OUTLOOK Despite ongoing layoffs and continued debt problems, there is cause for optimism that the economy will recover. The Federal Reserve's aggressive rate cuts have taken short-term rates to their lowest levels in 40 years. Consumers have reliquified through the mortgage-refinancing boom. Housing remains vibrant and will continue to lead spending on furniture and other durable goods. While consumer spending cannot surge in a tough job environment, there is no imminent collapse ahead. Business spending has contracted through this recession and is now poised to snap back. Orders are strengthening in some of the hardest hit sectors of the economy, such as semiconductors. The stock market rally since September also suggests that recovery is at hand. Historically, the market rebounds three to six months before recession's end. Though the worst of the slump is behind us, the recovery will not be vigorous. The upturn in 2002 will benefit from patient Federal Reserve policy. With no inflation problem, and in the presence of large global concerns, the Fed will want to insure that the economy is stable before changing its posture. *The Wilshire 5000 Index measures broad stock market total-return performance and is provided for general comparative purposes. The index is unmanaged and not available for direct investment. 168 PHOENIX-SENECA MID-CAP GROWTH SERIES We are well aware of the risks to our forecast. A renewed economic downdraft or a terrorist attack could derail a solid rebound. We believe, however, that the enormous liquidity that the Federal Reserve has supplied will turn the tide in the economy. The terrorist threat is a constant, but the extraordinary market rebound after September 11th is a testament to the vitality of the U.S. financial system in the face of almost unimaginable horror. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Mid-Cap Growth Series Russell MidCap Growth Index(1) S&P 500 Index(2) S&P MidCap 400 Index(3) 3/2/98 $10,000.00 $10,000.00 $10,000.00 $10,000.00 12/31/98 12,175.10 10,987.50 11,895.30 11,220.90 12/31/99 17,729.00 16,623.50 14,409.40 12,872.80 12/29/00 20,166.40 14,670.60 13,085.60 15,126.20 12/31/01 15,067.80 11,714.30 11,531.70 15,200.30
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 3/2/98 TO 1 YEAR 12/31/01 - -------------------------------------------------------------------------------- Mid-Cap Growth Series (25.28)% 11.28% - -------------------------------------------------------------------------------- Russell MidCap Growth Index(1) (20.15)% 4.21% - -------------------------------------------------------------------------------- S&P 500 Index(2) (11.87)% 3.79% - -------------------------------------------------------------------------------- S&P MidCap 400 Index(3) 0.49% 11.54% - -------------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 3/2/98 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. (1) The Russell MidCap Growth Index is an unmanaged measure of mid-capitalization growth-oriented stock total return performance. This benchmark was changed from the prior year to more accurately reflect the allocation of the Series. (2) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance and is provided for general comparative purposes. (3) The S&P MidCap 400 Index is an unmanaged commonly used measure of mid-cap stock total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 169 PHOENIX-SENECA MID-CAP GROWTH SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE ------ ----------- COMMON STOCKS--87.6% BIOTECHNOLOGY--3.2% Genzyme Corp. (b) .................................. 37,300 $ 2,232,778 ----------- BROADCASTING (TELEVISION, RADIO & CABLE)--5.5% EchoStar Communications Corp. Class A (b) .......... 70,860 1,946,524 Univision Communications, Inc. Class A (b) ......... 45,370 1,835,670 ----------- 3,782,194 ----------- COMPUTERS (HARDWARE)--5.0% Brocade Communications Systems, Inc. (b) ........... 58,010 1,921,291 Juniper Networks, Inc. (b) ......................... 79,330 1,503,304 ----------- 3,424,595 ----------- COMPUTERS (SOFTWARE & SERVICES)--3.1% Electronic Arts, Inc. (b) .......................... 35,570 2,132,421 ----------- DISTRIBUTORS (FOOD & HEALTH)--3.2% AmerisourceBergen Corp. ............................ 34,590 2,198,194 ----------- ELECTRICAL EQUIPMENT--3.7% SPX Corp. (b) ...................................... 18,590 2,544,971 ----------- ELECTRONICS (SEMICONDUCTORS)--15.1% Advanced Micro Devices, Inc. (b) ................... 109,710 1,740,001 Altera Corp. (b) ................................... 96,470 2,047,093 Atmel Corp. (b) .................................... 223,310 1,645,795 LSI Logic Corp. (b) ................................ 120,310 1,898,492 RF Micro Devices, Inc. (b) ......................... 68,500 1,317,255 Semtech Corp. (b) .................................. 50,070 1,786,998 ----------- 10,435,634 ----------- EQUIPMENT (SEMICONDUCTORS)--2.3% Novellus Systems, Inc. (b) ......................... 39,930 1,575,238 ----------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--3.1% Allergan, Inc. ..................................... 28,140 2,111,907 ----------- HEALTH CARE (HOSPITAL MANAGEMENT)--2.1% Tenet Healthcare Corp. (b) ......................... 24,860 1,459,779 ----------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--6.5% Biomet, Inc. ....................................... 72,550 2,241,795 St. Jude Medical, Inc. (b) ......................... 28,350 2,201,378 ----------- 4,443,173 ----------- HEALTH CARE (SPECIALIZED SERVICES)--5.1% HEALTHSOUTH Corp. (b) .............................. 137,860 2,043,085 Laboratory Corporation of America Holdings (b) ..... 17,910 1,448,024 ----------- 3,491,109 ----------- HOUSEHOLD PRODUCTS (NON-DURABLE)--2.5% Clorox Co. (The) ................................... 44,090 1,743,760 ----------- LEISURE TIME (PRODUCTS)--3.3% Harley-Davidson, Inc. .............................. 41,470 2,252,236 ----------- MANUFACTURING (DIVERSIFIED)--2.9% American Standard Cos., Inc. (b) ................... 29,660 2,023,702 ----------- MANUFACTURING (SPECIALIZED)--2.6% Jabil Circuit, Inc. (b) ............................ 78,650 1,786,928 ----------- PUBLISHING (NEWSPAPERS)--2.4% New York Times Co. (The) Class A ................... 37,780 1,633,985 ----------- SHARES VALUE ------ ----------- RETAIL (COMPUTERS & ELECTRONICS)--2.1% Circuit City Stores-Circuit City Group ............. 56,260 $ 1,459,947 ----------- RETAIL (SPECIALTY)--6.0% Office Depot, Inc. (b) ............................. 124,950 2,316,573 Tiffany & Co. ...................................... 57,970 1,824,316 ----------- 4,140,889 ----------- RETAIL (SPECIALTY-APPAREL)--5.0% American Eagle Outfitters, Inc. (b) ................ 68,220 1,785,317 Intimate Brands, Inc. .............................. 112,380 1,669,967 ----------- 3,455,284 ----------- SAVINGS & LOAN COMPANIES--2.9% Charter One Financial, Inc. ........................ 73,587 1,997,887 ----------- TOTAL COMMON STOCKS (Identified cost $58,868,781) ................................. 60,326,611 ----------- FOREIGN COMMON STOCKS--8.3% COMPUTERS (PERIPHERALS)--2.1% ATI Technologies, Inc. (Canada) (b) ................ 113,030 1,435,481 ----------- ELECTRONICS (SEMICONDUCTORS)--3.3% Marvell Technology Group Ltd. (Bermuda) (b) ........ 63,790 2,284,958 ----------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--2.9% Biovail Corp. (Canada) (b) ......................... 35,720 2,009,250 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $4,710,799) .................................. 5,729,689 ----------- TOTAL LONG-TERM INVESTMENTS--95.9% (Identified cost $63,579,580) ................................. 66,056,300 ----------- STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) ----------- ------ SHORT-TERM OBLIGATIONS--3.2% COMMERCIAL PAPER--3.2% Bavaria Universal Funding 1.93%, 1/2/02 .. A-1 $1,000 999,946 Govco, Inc. 1.75%, 1/2/02 ................ A-1+ 1,245 1,244,940 ----------- 2,244,886 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $2,244,886) ................................. 2,244,886 ----------- TOTAL INVESTMENTS--99.1% (Identified cost $65,824,466) ................................ 68,301,186(a) Other assets and liabilities, net--0.9% ...................... 593,672 ----------- NET ASSETS--100.0% ............................................. $68,894,858 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $5,984,842 and gross depreciation of $3,788,478 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $66,104,822. (b) Non-income producing. See Notes to Financial Statements 170 PHOENIX-SENECA MID-CAP GROWTH SERIES
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $65,824,466) ............................................ $ 68,301,186 Receivables Investment securities sold ............................................................................ 636,086 Fund shares sold ...................................................................................... 106,337 Interest and dividends ................................................................................ 3,303 Prepaid expenses ........................................................................................ 652 ------------ Total assets ........................................................................................ 69,047,564 ------------ LIABILITIES Cash overdraft .......................................................................................... 63 Payables Fund shares repurchased ............................................................................... 24,185 Printing fee .......................................................................................... 44,973 Investment advisory fee ............................................................................... 41,965 Professional fee ...................................................................................... 27,449 Financial agent fee ................................................................................... 7,360 Trustees' fee ......................................................................................... 3,262 Accrued expenses ........................................................................................ 3,449 ------------ Total liabilities ................................................................................... 152,706 ------------ NET ASSETS .............................................................................................. $ 68,894,858 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ...................................................... $ 88,895,604 Accumulated net realized loss ......................................................................... (22,477,466) Net unrealized appreciation ........................................................................... 2,476,720 ------------ NET ASSETS .............................................................................................. $ 68,894,858 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ........................ 5,152,233 ============ Net asset value and offering price per share ............................................................ $13.37 ======
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Interest .............................................................................................. $ 203,526 Dividends ............................................................................................. 161,476 ------------ Total investment income ............................................................................. 365,002 ------------ EXPENSES Investment advisory fee ............................................................................... 550,452 Financial agent fee ................................................................................... 91,826 Printing .............................................................................................. 52,148 Professional .......................................................................................... 28,867 Custodian ............................................................................................. 14,916 Trustees .............................................................................................. 8,437 Miscellaneous ......................................................................................... 7,670 ------------ Total expenses ...................................................................................... 754,316 Less expense borne by investment adviser ............................................................ (30,850) Custodian fees paid indirectly ...................................................................... (954) ------------ Net expenses ........................................................................................ 722,512 ------------ NET INVESTMENT LOSS ..................................................................................... (357,510) ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ....................................................................... (19,873,580) Net change in unrealized appreciation (depreciation) on investments ................................... (550,926) ------------ NET LOSS ON INVESTMENTS ................................................................................. (20,424,506) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS .................................................... $(20,782,016) ============
See Notes to Financial Statements 171 PHOENIX-SENECA MID-CAP GROWTH SERIES
STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ------------ ----------- FROM OPERATIONS Net investment income (loss) .................................................................... $ (357,510) $ (139,970) Net realized gain (loss) ........................................................................ (19,873,580) 2,070,441 Net change in unrealized appreciation (depreciation) ............................................ (550,926) (2,510,449) ------------ ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................................... (20,782,016) (579,978) ------------ ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net realized short-term gains ................................................................... -- (4,510,617) Net realized long-term gains .................................................................... -- (1,369,745) ------------ ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ....................................... -- (5,880,362) ------------ ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (2,791,753 and 3,376,632 shares, respectively) .................. 41,997,776 69,152,651 Net asset value of shares issued from reinvestment of distributions (0 and 312,867 shares, respectively) ................................................................................. -- 5,880,362 Cost of shares repurchased (1,607,612 and 986,247 shares, respectively) ......................... (23,336,210) (19,414,242) ------------ ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ....................................... 18,661,566 55,618,771 ------------ ----------- NET INCREASE (DECREASE) IN NET ASSETS ........................................................... (2,120,450) 49,158,431 NET ASSETS Beginning of period ............................................................................. 71,015,308 21,856,877 ------------ ----------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $0 AND $0, RESPECTIVELY) ................................................................................. $ 68,894,858 $71,015,308 ============ ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) YEAR ENDED FROM DECEMBER 31, INCEPTION --------------------------- 3/2/98 TO 2001 2000 1999 12/31/98 ------ ------ ------ ----------- Net asset value, beginning of period .......................................... $17.90 $17.28 $12.16 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(4) ............................................. (0.08) (0.06) -- 0.01 Net realized and unrealized gain (loss) ..................................... (4.45) 2.51 5.54 2.16 ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .......................................... (4.53) 2.45 5.54 2.17 ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ........................................ -- -- -- (0.01) Dividends from net realized gains ........................................... -- (1.83) (0.42) -- ------ ------ ------ ------ TOTAL DISTRIBUTIONS ....................................................... -- (1.83) (0.42) (0.01) ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ..................................................... (4.53) 0.62 5.12 2.16 ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ................................................ $13.37 $17.90 $17.28 $12.16 ====== ====== ====== ====== Total return .................................................................. (25.28)% 13.75% 45.62% 21.75%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ......................................... $68,895 $71,015 $21,857 $7,897 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(3) ....................................................... 1.05%(5) 1.05% 1.05% 1.05%(1) Net investment income (loss) ................................................ (0.52)% (0.28)% (0.33)% 0.15%(1) Portfolio turnover rate ....................................................... 137% 97% 169% 127%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.10%, 1.19%, 2.04% and 2.82% for the periods ended December 31, 2001, 2000, 1999 and 1998, respectively. (4) Computed using average shares outstanding. (5) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 172 PHOENIX-SENECA STRATEGIC THEME SERIES INVESTOR PROFILE Phoenix-Seneca Strategic Theme Series seeks long-term capital appreciation by identifying securities benefiting from long-term trends present in the United States and abroad. INVESTMENT ADVISER'S REPORT For the 12 months ended December 31, 2001, Phoenix-Seneca Strategic Theme Edge Series returned -27.36% compared with a return of -11.87% for the S&P 500 Index(2) and -20.42% for the Russell 1000 Growth Stock Index.(1) The year 2001 was extraordinary in its harshness in every regard, and for investors, it deepened the misery of 2000. It is rare for the U.S. equity markets to post two consecutive annual declines, but virtually all major stock market averages fell in each of the last two years. Despite a remarkably strong rally in the fourth quarter of 2001, the broadest measure of U.S. stock performance, the Wilshire 5000 Index*, registered a double-digit percentage decline for the year. In hindsight, the reasons for the sharp sell off are clear: the bursting of the tech bubble and the dramatic economic slowdown from the heady pace of the late 1990s. We had hoped the inevitable Internet crash could occur without devastating the economy, but the interconnections between the "new" and the "old" economies were substantial. As upstarts imploded, they took a chunk out of the revenue streams of established companies throughout the economy, from technology to real estate to retailing. Any company that had relied on the dot coms and telecoms to continue spending on equipment, space, supplies and services was disappointed. Easy money, overinvestment, overleverage, and overcapacity in the "new" economy led to a sharp downturn in the entire economy. Groups as far removed from the technology bubble as pharmaceuticals and utilities fell hard. Growth stocks were especially beaten down as multiples deflated and new growth industries such as the Internet and alternative telecommunications fizzled. "Value" investing, which is variously defined as investing in asset rich companies, companies with low P/E multiples, or turnaround situations, lost less during the bear market. As "growth" investors, we have not been spared. Our valuation disciplines and risk controls, however, bolstered our performance during the bear market. The most significant drag on performance for the portfolio during the last 12 months came from the technology sector. Technology was by far the largest weighting in the portfolio in 2001, averaging over 30% and it was the worst performing sector. As growth managers, we will tend to have higher exposure to traditional high growth areas, such as technology, than the broad market. Six of the bottom ten contributors to performance for the year were technology stocks. The portfolio was also hurt by the underperformance of our consumer cyclicals holdings. This sector provided the second best performance in the benchmark for the year. Seneca's stocks posted a negative return, primarily due to Crown Castle International Corp., a wireless tower company we sold in July, and Cendant Corp., a travel services company. Cendant was our only holding directly affected by the September 11th attacks, and we sold the stock at the end of September. The outperformance of our health-care stocks was a significant positive in 2001. Our top performers in this sector were Johnson & Johnson, Laboratory Corp. of America Holdings and Medtronic, Inc. Johnson & Johnson was the number one overall contributor to performance for the year, and Lab Corp. and Medtronic were both in the top ten. These companies were able to produce significant earnings gains despite the deteriorating economy. The portfolio's underweighted position in utility stocks and their outperformance helped performance on a relative basis. Utilities were the worst performers in the Russell 1000 Growth Index, down over 70%. Our utility holdings were limited to two stocks: Mirant Corp. and El Paso Natural Gas, both of which were sold in the first half of the year (Mirant was sold with a gain of over 30%). We did not hold stocks in the sector during the periods of their worst performance. OUTLOOK Despite ongoing layoffs and continued debt problems, there is cause for optimism that the economy will recover. The Federal Reserve's aggressive rate cuts have taken short-term rates to their lowest levels in 40 years. Consumers have reliquified through the mortgage-refinancing boom. Housing remains vibrant and will continue to lead spending on furniture and other durable goods. While consumer spending cannot surge in a tough job environment, there is no imminent collapse ahead. Business spending has contracted through this recession and is now poised to snap back. Orders are strengthening in some of the hardest hit sectors of the economy, such as semiconductors. The stock market rally since September also suggests that recovery is at hand. Historically, the market rebounds three to six months before recession's end. * The Wilshire 5000 Index measures broad stock market total-return performance and is provided for general comparative purposes. The index is unmanaged and not available for direct investment. 173 PHOENIX-SENECA STRATEGIC THEME SERIES Though the worst of the slump is behind us, the recovery will not be vigorous. The upturn in 2002 will benefit from patient Federal Reserve policy. With no inflation problem, and in the presence of large global concerns, the Fed will want to ensure that the economy is stable before changing its posture. We are well aware of the risks to our forecast. A renewed economic downdraft or a terrorist attack could derail a solid rebound. We believe, however, that the enormous liquidity that the Federal Reserve has supplied will turn the tide in the economy. The terrorist threat is a constant, but the extraordinary market rebound after September 11th is a testament to the vitality of the U.S. financial system in the face of almost unimaginable horror. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Strategic Theme Series Russell 1000 Growth Stock Index(1) S&P 500 Inde( 2) S&P MidCap 400 Index(3) 1/29/96 $10,000.00 $10,000.00 $10,000.00 $10,000.00 12/31/96 11,033.00 12,150.40 12,144.20 11,959.40 12/31/97 12,926.80 15,854.80 16,197.40 15,818.20 12/31/98 18,703.90 21,991.50 20,855.20 18,841.30 12/31/99 28,986.60 29,283.70 25,263.00 21,614.90 12/29/00 25,665.40 22,717.20 22,942.00 25,398.70 12/31/01 18,644.40 18,077.60 20,217.70 25,523.20
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/01 FROM INCEPTION 1/29/96 TO 1 YEAR 5 YEAR 12/31/01 - -------------------------------------------------------------------------------- Strategic Theme Series (27.36)% 11.06% 11.08% - -------------------------------------------------------------------------------- Russell 1000 Growth Stock Index(1) (20.42)% 8.27% 10.51% - -------------------------------------------------------------------------------- S&P 500 Index(2) (11.87)% 10.73% 12.61% - -------------------------------------------------------------------------------- S&P MidCap 400 Index(3) 0.49% 16.37% 17.13% - -------------------------------------------------------------------------------- This chart assumes an initial gross investment of $10,000 made on 1/29/96 (inception of the Fund). Returns shown include the reinvestment of all distributions at net asset value, and the change in share price for the stated period. Returns indicate past performance, which is not predictive of future performance. Investment return and net asset value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Foreign investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risks. (1) The Russell 1000 Growth Stock Index is an unmanaged, commonly used measure of large-cap growth-oriented stock total return performance. (2) The S&P 500 Index is an unmanaged, commonly used measure of stock total return performance and is provided for general comparative purposes. (3) The S&P MidCap 400 Index is an unmanaged commonly used measure of mid-cap stock total return performance and is provided for general comparative purposes. The indices are not available for direct investment. 174 PHOENIX-SENECA STRATEGIC THEME SERIES SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 SHARES VALUE ------ ------------ COMMON STOCKS--90.1% BIOTECHNOLOGY--3.5% Genzyme Corp. (b) ................................. 81,650 $ 4,887,569 ------------ BROADCASTING (TELEVISION, RADIO & CABLE)--8.1% Clear Channel Communications, Inc. (b) ............ 116,960 5,954,434 EchoStar Communications Corp. Class A (b) ......... 196,850 5,407,469 ------------ 11,361,903 ------------ COMPUTERS (HARDWARE)--11.8% Dell Computer Corp. (b) ........................... 197,270 5,361,799 International Business Machines Corp. ............. 46,200 5,588,352 Sun Microsystems, Inc. (b) ........................ 449,850 5,533,155 ------------ 16,483,306 ------------ COMPUTERS (NETWORKING)--3.5% Cisco Systems, Inc. (b) ........................... 267,500 4,844,425 ------------ COMPUTERS (SOFTWARE & SERVICES)--4.1% Microsoft Corp. (b) ............................... 87,300 5,783,625 ------------ ELECTRICAL EQUIPMENT--6.9% General Electric Co. .............................. 115,000 4,609,200 SPX Corp. (b) ..................................... 37,500 5,133,750 ------------ 9,742,950 ------------ ELECTRONICS (SEMICONDUCTORS)--8.6% Intel Corp. ....................................... 208,370 6,553,236 Micron Technology, Inc. (b) ....................... 179,090 5,551,790 ------------ 12,105,026 ------------ FINANCIAL (DIVERSIFIED)--7.3% American Express Co. .............................. 117,900 4,207,851 Citigroup, Inc. ................................... 119,706 6,042,759 ------------ 10,250,610 ------------ HEALTH CARE (HOSPITAL MANAGEMENT)--3.4% HCA, Inc. ......................................... 125,300 4,829,062 ------------ HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--8.1% Baxter International, Inc. ........................ 97,820 5,246,087 Medtronic, Inc. (b) ............................... 118,120 6,048,925 ------------ 11,295,012 ------------ HEALTH CARE (SPECIALIZED SERVICES)--2.6% Laboratory Corporation of America Holdings (b) .... 44,560 3,602,676 ------------ HOUSEHOLD PRODUCTS (NON-DURABLE)--3.5% Procter & Gamble Co. (The) ........................ 62,000 4,906,060 ------------ INSURANCE (MULTI-LINE)--3.6% American International Group, Inc. ................ 63,500 5,041,900 ------------ INVESTMENT BANKING/BROKERAGE--3.7% Goldman Sachs Group, Inc. (The) ................... 55,300 5,129,075 ------------ RETAIL (SPECIALTY)--8.2% Office Depot, Inc. (b) ............................ 314,860 5,837,504 Tiffany & Co. ..................................... 178,240 5,609,213 ------------ 11,446,717 ------------ WASTE MANAGEMENT--3.2% Waste Management, Inc. ............................ 141,700 4,521,647 ------------ TOTAL COMMON STOCKS (Identified cost $118,113,295) ............................... 126,231,563 ------------ SHARES VALUE ------ ------------ FOREIGN COMMON STOCKS--7.1% ELECTRICAL EQUIPMENT--3.9% Flextronics International Ltd. (Singapore) (b) .... 228,180 $ 5,474,038 ------------ ELECTRONICS (SEMICONDUCTORS)--3.2% Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan) (b) .................................... 255,900 4,393,803 ------------ TOTAL FOREIGN COMMON STOCKS (Identified cost $9,089,414) ................................. 9,867,841 ------------ TOTAL LONG-TERM INVESTMENTS--97.2% (Identified cost $127,202,709) ............................... 136,099,404 ------------ STANDARD & POOR'S PAR RATING VALUE (UNAUDITED) (000) ----------- ----- SHORT-TERM OBLIGATIONS--6.7% COMMERCIAL PAPER--6.7% Verizon Network Funding Corp. 2%, 1/2/02 .............................. A-1+ $3,770 3,769,791 Lexington Parker Capital Co. LLC 2%, 1/8/02 .............................. A-1 2,000 1,999,222 Special Purpose Accounts Receivable Cooperative Corp. 1.77%, 1/9/02 ..... A-1 3,650 3,648,564 ------------ TOTAL SHORT-TERM OBLIGATIONS (Identified cost $9,417,577) .............................. 9,417,577 ------------ TOTAL INVESTMENTS--103.9% (Identified cost $136,620,286) ............................ 145,516,981(a) Other assets and liabilities, net--(3.9)% ................. (5,420,760) ------------ NET ASSETS--100.0% .......................................... $140,096,221 ============ (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $13,783,627 and gross depreciation of $4,886,932 for federal income tax purposes. At December 31, 2001, the aggregate cost of securities for federal income tax purposes was $136,620,286. (b) Non-income producing. See Notes to Financial Statements 175 PHOENIX-SENECA STRATEGIC THEME SERIES
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001 ASSETS Investment securities at value (Identified cost $136,620,286) .......................................... $145,516,981 Receivables Investment securities sold ........................................................................... 1,225,106 Dividends and interest ............................................................................... 84,761 Fund shares sold ..................................................................................... 58,477 Prepaid expenses ....................................................................................... 1,545 ------------ Total assets ....................................................................................... 146,886,870 ------------ LIABILITIES Cash overdraft ......................................................................................... 1,769 Payables Investment securities purchased ...................................................................... 6,503,456 Fund shares repurchased .............................................................................. 70,350 Investment advisory fee .............................................................................. 88,974 Financial agent fee .................................................................................. 11,816 Trustees' fee ........................................................................................ 3,262 Accrued expenses ....................................................................................... 111,022 ------------ Total liabilities .................................................................................. 6,790,649 ------------ NET ASSETS ............................................................................................. $140,096,221 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ..................................................... $207,674,837 Accumulated net realized loss ........................................................................ (76,475,311) Net unrealized appreciation .......................................................................... 8,896,695 ------------ NET ASSETS ............................................................................................. $140,096,221 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ....................... 12,767,401 ============ Net asset value and offering price per share ........................................................... $10.97 ======
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 INVESTMENT INCOME Dividends ............................................................................................ $ 636,408 Interest ............................................................................................. 430,612 ------------ Total investment income ............................................................................ 1,067,020 ------------ EXPENSES Investment advisory fee .............................................................................. 1,224,079 Financial agent fee .................................................................................. 166,984 Printing ............................................................................................. 84,415 Custodian ............................................................................................ 36,851 Professional ......................................................................................... 26,863 Trustees ............................................................................................. 8,437 Miscellaneous ........................................................................................ 11,949 ------------ Total expenses ..................................................................................... 1,559,578 Custodian fees paid indirectly ..................................................................... (1,694) ------------ Net expenses ....................................................................................... 1,557,884 ------------ NET INVESTMENT LOSS .................................................................................... (490,864) ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ...................................................................... (70,937,839) Net change in unrealized appreciation (depreciation) on investments .................................. 15,104,041 ------------ NET LOSS ON INVESTMENTS ................................................................................ (55,833,798) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................................... $(56,324,662) ============
See Notes to Financial Statements 176 PHOENIX-SENECA STRATEGIC THEME SERIES
STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED YEAR ENDED 12/31/01 12/31/00 ------------ ------------ FROM OPERATIONS Net investment income (loss) ..................................................................... $ (490,864) $ (732,184) Net realized gain (loss) ......................................................................... (70,937,839) 31,678,375 Net change in unrealized appreciation (depreciation) ............................................. 15,104,041 (63,982,937) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...................................... (56,324,662) (33,036,746) ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net realized short-term gains .................................................................... (4,577,499) (10,013,375) Net realized long-term gains ..................................................................... (41,567) (17,523,406) ------------ ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ........................................ (4,619,066) (27,536,781) ------------ ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (3,047,646 and 4,520,187 shares, respectively) ..................... 38,481,933 101,129,131 Net asset value of shares issued from reinvestment of distributions (352,756 and 1,741,656 shares, respectively) .................................................................................. 4,619,066 27,536,781 Cost of shares repurchased (3,750,199 and 1,922,135 shares, respectively) ........................ (45,578,210) (41,925,955) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ........................................ (2,477,211) 86,739,957 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ............................................................ (63,420,939) 26,166,430 NET ASSETS Beginning of period .............................................................................. 203,517,160 177,350,730 ------------ ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $0 AND $0, RESPECTIVELY) .. $140,096,221 $203,517,160 ============ ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) YEAR ENDED DECEMBER 31, ----------------------------------------------- 2001 2000 1999 1998 1997 ------ ------ ------ ------ ------ Net asset value, beginning of period ....................................... $15.52 $20.21 $15.40 $11.32 $10.98 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ............................................. (0.04)(3) (0.07)(3) -- 0.01 0.05 Net realized and unrealized gain (loss) .................................. (4.15) (2.20) 8.19 5.03 1.82 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ....................................... (4.19) (2.27) 8.19 5.04 1.87 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ..................................... -- -- -- (0.01) (0.05) Dividends from net realized gains ........................................ (0.36) (2.42) (2.91) (0.95) (1.47) Tax return of capital .................................................... -- -- (0.47) -- (0.01) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS .................................................... (0.36) (2.42) (3.38) (0.96) (1.53) ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE .................................................. (4.55) (4.69) 4.81 4.08 0.34 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ............................................. $10.97 $15.52 $20.21 $15.40 $11.32 ====== ====== ====== ====== ====== Total return ............................................................... (27.36)% (11.46)% 54.98% 44.69% 17.16% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ...................................... $140,096 $203,517 $177,351 $75,098 $47,620 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) .................................................... 0.96%(2) 0.92% 0.97% 0.99% 1.00% Net investment income (loss) ............................................. (0.30)% (0.32)% (0.18)% (0.01)% 0.42% Portfolio turnover rate .................................................... 162% 118% 150% 364% 642% (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.14% for the periods ended December 31, 1997. (2) For the year ended December 31, 2001 the ratio of operating expenses to average net assets excludes the effect of expense offsets from custodian fees if expense offsets were included, the ratio would not significantly differ. (3) Computed using average shares outstanding.
See Notes to Financial Statements 177 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 NOTE 1--ORGANIZATION The Phoenix Edge Series Fund (the "Fund") is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund was established as part of the December 8, 1986 reorganization of the Phoenix Life Variable Accumulation Account (the "Account") from a management investment company to a unit investment trust under the Investment Company Act of 1940. The Fund is organized with Series which are available only to the subaccounts of the Phoenix Life Variable Accumulation Account, Phoenix Life Variable Universal Life Account, PHL Variable Accumulation Account, PHL Variable Universal Life Account, Phoenix Life and Annuity Variable Universal Life Account, and Phoenix Life Separate Accounts B, C and D. The Fund is comprised of 30 Series each having a distinct investment objective as outlined below:
- ------------------------------------------------------------------------------------------------------------------------------------ FUND NAME INVESTMENT OBJECTIVE - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Aberdeen International Series ("Aberdeen International") High total return consistent with reasonable risk. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Aberdeen New Asia Series ("Aberdeen New Asia") Long-term capital appreciation. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-AIM Mid-Cap Equity Series ("AIM Mid-Cap Equity") Long-term growth of capital. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Alliance/Bernstein Growth + Value Series Long-term capital growth. ("Alliance/Bernstein Growth + Value") - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Deutsche Dow 30 Series ("Deutsche Dow 30") Track the total return of the Dow Jones Industrial (formerly Phoenix-Bankers Trust Dow 30 Series) Average(SM) before fund expenses. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Deutsche Nasdaq-100 Index(R) Series ("Deutsche Nasdaq-100 Track the total return of the NASDAQ 100 Index(R) before Index(R)") (formerly Phoenix-Bankers Trust Nasdaq-100 Index(R) Series) fund expenses. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Duff & Phelps Real Estate Securities Series Capital appreciation and income with approximately equal ("Duff & Phelps Real Estate Securities") emphasis. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Capital Growth Series ("Engemann Intermediate and long-term growth of capital, with income Capital Growth") as a secondary consideration. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Nifty Fifty Series Long-term capital appreciation by investing in ("Engemann Nifty Fifty") approximately 50 different securities that offer the best potential for long-term growth of capital. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Small & Mid-Cap Growth Series Long-term growth of capital by normally investing at least ("Engemann Small & Mid-Cap Growth") 65% of assets in equities of "small-cap" and "mid-cap" companies with market capitalization under $2 billion. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Federated U.S. Government Bond Series Maximize total return by investing primarily in debt ("Federated U.S. Government Bond") obligations of the U.S. Government, its agencies and instrumentalities. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Goodwin Money Market Series Provide maximum current income consistent with capital ("Goodwin Money Market") preservation and liquidity. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Goodwin Multi-Sector Fixed Income Series Long-term total return. ("Goodwin Multi-Sector Fixed Income") - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Hollister Value Equity Series Long-term capital appreciation and a secondary investment ("Hollister Value Equity") objective of current income. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-J.P. Morgan Research Enhanced Index Series High total return by investing in a broadly diversified ("J.P. Morgan Research Enhanced Index") portfolio of equity securities of large and medium capitalization companies within market sectors reflected in the S&P 500. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Janus Core Equity Series ("Janus Core Equity") Long-term growth of capital. (formerly, Phoenix-Janus Equity Income Series) - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Janus Flexible Income Series Maximum total return consistent with the preservation of ("Janus Flexible Income") capital. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Janus Growth Series ("Janus Growth") Long-term capital growth consistent with the preservation of capital. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-MFS Investors Growth Stock Series Long-term growth of capital and future income rather than ("MFS Investors Growth Stock") current income. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-MFS Investors Trust Series ("MFS Investors Trust") Long-term growth of capital and secondarily to provide reasonable current income. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-MFS Value Series ("MFS Value") Capital appreciation and reasonable income. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Morgan Stanley Focus Equity Series Capital appreciation by investing primarily in equity ("Morgan Stanley Focus Equity") securities. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Oakhurst Balanced Series ("Oakhurst Balanced") Reasonable income, long-term capital growth and conservation of capital. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Oakhurst Growth and Income Series Dividend growth, current income and capital appreciation ("Oakhurst Growth and Income") by investing in common stocks. - ------------------------------------------------------------------------------------------------------------------------------------
178 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2001
- ------------------------------------------------------------------------------------------------------------------------------------ FUND NAME INVESTMENT OBJECTIVE - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Oakhurst Strategic Allocation Series Realize as high a level of total rate of return over an ("Oakhurst Strategic Allocation") extended period of time as is considered consistent with prudent investment risk. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Sanford Bernstein Global Value Series Long-term capital appreciation through investing in ("Sanford Bernstein Global Value") foreign and domestic equity securities. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Sanford Bernstein Mid-Cap Value Series Long-term capital appreciation with current income as the ("Sanford Bernstein Mid-Cap Value") secondary investment objective. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Sanford Bernstein Small-Cap Value Series Long-term capital appreciation by investing primarily in ("Sanford Bernstein Small-Cap Value") small-capitalization stocks the adviser believes are undervalued. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Seneca Mid-Cap Growth Series Capital appreciation primarily through investments in ("Seneca Mid-Cap Growth") equity securities of companies that have the potential for above average market appreciation. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Seneca Strategic Theme Series Long-term appreciation of capital by identifying ("Seneca Strategic Theme") securities benefiting from long-term trends present in the United States and abroad. - ------------------------------------------------------------------------------------------------------------------------------------
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates. A. SECURITY VALUATION Equity securities are valued at the last sale price, or if there had been no sale that day, at the last bid price. Debt securities are valued on the basis of broker quotations or valuations provided by a pricing service which utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities in determining value. Short-term investments having a remaining maturity of 60 days or less are valued at amortized cost which approximates market. All other securities and assets are valued at their fair value as determined in good faith by or under the direction of the Trustees. Certain securities held by the following Series were valued on the basis of a price provided by a principal market maker. The prices provided by the principal market makers may differ from the value that would be realized if the securities were sold. At December 31, 2001, the total value of securities for which prices were provided by principal market makers represented (approximately) the following percentages of net assets: SERIES PERCENTAGE OF NET ASSETS ------ ------------------------ Goodwin Multi-Sector Fixed Income ............... 6% Goodwin Money Market uses the amortized cost method of security valuation which, in the opinion of the Trustees, represents the fair value of the particular security. The Trustees monitor the deviations between the Series' net asset value per share as determined by using available market quotations and its net asset value per share using amortized cost. If the deviation exceeds 1/2 of 1%, the Board of Trustees will consider what action, if any, should be initiated to provide fair valuation. The Series attempts to maintain a constant net asset value of $10 per share. B. SECURITY TRANSACTIONS AND RELATED INCOME Security transactions are recorded on the trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date, or in the case of certain foreign securities, as soon as the Fund is notified. The Fund amortizes premiums and discounts using the effective interest method. Realized gains and losses are determined on the identified cost basis. Effective January 1, 2001, the Fund adopted the revised AICPA Audit and Accounting Guide, Audits of Investment Companies and began to amortize premium on fixed income securities and classify gains and losses on mortgage- and asset-backed securities previously included in realized gains and losses, as a component of interest income. The cumulative effect of the accounting changes had no impact on total net assets of the Fund or the Fund's net asset value, but resulted in reductions to the cost of securities, corresponding increases in net unrealized appreciation (depreciation), and equivalent decreases in undistributed net investment income based on securities held by each Series on December 31, 2000 as detailed below:
REDUCTION IN INCREASE IN UNREALIZED SERIES COST OF SECURITIES APPRECIATION (DEPRECIATION) ------ ------------------ --------------------------- Engemann Capital Growth .................. $ 876 $ 876 Federated U.S. Government Bond ........... 30,566 30,566 Goodwin Multi-Sector Fixed Income ........ 63,340 63,340 Janus Core Equity ........................ 14,163 14,163 Janus Flexible Income .................... 2,585 2,585 Oakhurst Balanced ........................ 69,136 69,136 Oakhurst Strategic Allocation ............ 75,019 75,019
179 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2001 The effect of this change for the year ended December 31, 2001 was to increase (decrease) net investment income, increase (decrease) net unrealized appreciation (depreciation) and increase (decrease) net realized gains (losses) for each Series as detailed below. The statement of changes in net assets and financial highlights for the prior periods have not been restated to reflected this change.
INCREASE (DECREASE) IN NET UNREALIZED NET REALIZED NET INVESTMENT APPRECIATION GAINS SERIES INCOME (DEPRECIATION) (LOSSES) ------ ---------------------- -------------- ------------ Engemann Capital Growth ................................ $ (30,601) $ 26,722 $ 3,879 Federated U.S. Government Bond ......................... (38,093) 28,391 9,702 Goodwin Multi-Sector Fixed Income ...................... 13,561 23,682 (37,243) J.P. Morgan Research Enhanced Index .................... (3,041) 832 2,209 Janus Core Equity ...................................... (10,743) 8,496 2,247 Janus Flexible Income .................................. (20,066) 7,394 12,672 Oakhurst Balanced ...................................... (71,220) 65,918 5,302 Oakhurst Strategic Allocation .......................... (141,191) 138,357 2,834
C. INCOME TAXES Each of the Series is treated as a separate taxable entity. It is the policy of each Series to comply with the requirements of the Internal Revenue Code (the "Code"), applicable to regulated investment companies, and to distribute all of its taxable income to its shareholders. To the extent that any Series does not distribute substantially all of its taxable earnings, it will be subject to a 4% non-deductible excise tax. D. DISTRIBUTIONS TO SHAREHOLDERS Distributions are recorded by each Series on the ex-dividend date and all distributions are reinvested into the Fund. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards, foreign currency gain/loss, gain/loss on futures contract, partnerships, and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. Certain distribution amounts have been reclassified to conform to the current year presentation. E. FOREIGN CURRENCY TRANSLATION Foreign securities and other assets and liabilities are valued using the foreign currency exchange rate effective at the end of the reporting period. Cost of investments is translated at the currency exchange rate effective at the trade date. The gain or loss resulting from a change in currency exchange rates between the trade and settlement dates of a portfolio transaction is treated as a gain or loss on foreign currency. Likewise, the gain or loss resulting from a change in currency exchange rates between the date income is accrued and paid is treated as a gain or loss on foreign currency. The Fund does not separate that portion of the results of operations arising from changes in exchange rates and that portion arising from changes in the market prices of securities. F. FORWARD CURRENCY CONTRACTS Certain Series may enter into forward currency contracts in conjunction with the planned purchase or sale of foreign denominated securities in order to hedge the U.S. dollar cost or proceeds. Forward currency contracts involve, to varying degrees, elements of market risk in excess of the amount recognized in the Statement of Assets and Liabilities. Risks arise from the possible movements in foreign exchange rates or if the counterparty does not perform under the contract. A forward currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded directly between currency traders and their customers. The contract is marked-to-market daily and the change in market value is recorded by the Series as an unrealized gain (or loss). When the contract is closed or offset with the same counterparty, the Series records a realized gain (or loss) equal to the change in the value of the contract when it was opened and the value at the time it was closed or offset. G. FUTURES CONTRACTS A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. Certain Series may enter into financial futures contracts as a hedge against anticipated changes in the market value of their portfolio securities. Upon entering into a futures contract, the Series is required to pledge to the broker an amount of cash and/or securities equal to the "initial margin" requirements of the futures exchange on which the contract is traded. Pursuant to the contract, the Series agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as "variation margins" and are recorded by the Series as unrealized gains or losses. When the contract is closed, the Series records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The potential risks to the Series are that the change in value of the futures contract may not correspond to the change in value of the hedged instruments and the counterparty may not fulfill its contractual obligations related to the contract. H. OPTIONS Certain Series may write covered options or purchase options contracts for the purpose of hedging against changes in the market value of the underlying securities or foreign currencies. Each Series will realize a gain or loss upon the expiration or closing of the option transaction. Gains and losses on written options are reported separately in the Statement of Operations. When a written option is exercised, the proceeds on sales or amounts paid are adjusted by the amount of premium received. Options written are reported as a liability in the Statement of Assets and Liabilities and 180 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2001 subsequently marked-to-market to reflect the current value of the option. The risk associated with written options is that the change in value of options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, or if a liquid secondary market does not exist for the contracts. Each Series may purchase options which are included in the Series' Schedule of Investments and subsequently marked-to-market to reflect the current value of the option. When a purchased option is exercised, the cost of the security is adjusted by the amount of premium paid. The risk associated with purchased options is limited to the premium paid. At December 31, 2001, the Fund had no options outstanding. I. EXPENSES Expenses incurred by the Fund with respect to any two or more Series are allocated in proportion to the net assets of each Series, except where allocation of direct expense to each Series or an alternative allocation method can be more fairly made. J. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS Certain Series may engage in when-issued or delayed delivery transactions. The Series record when-issued securities on the trade date and maintain collateral for the securities purchased. Securities purchased on a when-issued or delayed delivery basis begin earning interest on the settlement date. K. REPURCHASE AGREEMENTS A repurchase agreement is a transaction where a Series acquires a security for cash and obtains a simultaneous commitment from the seller to repurchase the security at an agreed upon price and date. The Series, through its custodian, takes possession of securities collateralizing the repurchase agreement. The collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Series in the event of default by the seller. If the seller defaults and the value of the collateral declines or, if the seller enters insolvency proceedings, realization of collateral may be delayed or limited. L. SWAP AGREEMENTS Certain Series may invest in swap agreements for the purpose of hedging against changes in interest rates or foreign currencies. Swap agreements involve the exchange by the Series with another party of their respective commitments to pay or receive interest, (e.g., an exchange of floating rate payments for fixed rate payments) with respect to a notional amount of principal. Swaps are marked to market daily based upon quotations from market makers and the change, if any, is recorded as an unrealized gain or loss in the Statement of Operations. Net payments of interest are recorded as interest income. Entering into these agreements involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreement may default on its obligation to perform and that there may be unfavorable changes in the fluctuation of interest and/or exchange rates. At December 31, 2001, the Fund had no swap agreements outstanding. M. LOAN AGREEMENTS Certain Series may invest in direct debt instruments which are interests in amounts owed by a corporate, governmental, or other borrower to lenders or lending syndicates. The Fund's investments in loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties. A loan is often administered by a bank or other financial institution (the lender) that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. When investing in a loan participation, the Fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the loan agreement and only upon receipt by the lender of payments from the borrower. The Fund generally has no right to enforce compliance with the terms of the loan agreement with the borrower. As a result, the Fund may be subject to the credit risk of both the borrower and the lender that is selling the loan agreement. When the Fund purchases assignments from lenders it acquires direct rights against the borrower on the loan. Direct indebtedness of emerging countries involves a risk that the government entities responsible for the repayment of the debt may be unable, or unwilling to pay the principal and interest when due. NOTE 3--INVESTMENT ADVISORY FEES AND RELATED PARTY TRANSACTIONS The Advisers to the Fund are Phoenix Investment Counsel, Inc. ("PIC"), Phoenix Variable Advisers, Inc. ("PVA"), Phoenix-Aberdeen International Advisers, LLC ("PAIA"), and Duff & Phelps Investment Management Co. ("DPIM"). As a compensation for their services to the Fund, the Advisers are entitled to a fee based upon the following annual rates as a percentage of the average daily net assets of each separate Series listed below:
RATE FOR FIRST RATE FOR NEXT RATE FOR OVER SERIES ADVISER $250 MILLION $250 MILLION $500 MILLION ------ ------- -------------- ------------- ------------- Aberdeen International .................................. PIC 0.75% 0.70% 0.65% Aberdeen New Asia ....................................... PAIA 1.00 1.00 1.00 AIM Mid-Cap Equity ...................................... PVA 0.85 0.85 0.85 Alliance/Bernstein Growth + Value ....................... PVA 0.85 0.85 0.85 Deutsche Dow 30 ......................................... PVA 0.35 0.35 0.35 Deutsche Nasdaq-100 Index(R) ............................ PVA 0.35 0.35 0.35 Engemann Capital Growth ................................. PIC 0.70 0.65 0.60 Engemann Nifty Fifty .................................... PIC 0.90 0.80 0.70 Engemann Small & Mid-Cap Growth ......................... PIC 0.90 0.90 0.90 Federated U.S. Government Bond .......................... PVA 0.60 0.60 0.60 Goodwin Money Market .................................... PIC 0.40 0.35 0.30 Goodwin Multi-Sector Fixed Income ....................... PIC 0.50 0.45 0.40 Hollister Value Equity .................................. PIC 0.70 0.65 0.60
181 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2001
RATE FOR FIRST RATE FOR NEXT RATE FOR OVER SERIES ADVISER $250 MILLION $250 MILLION $500 MILLION ------ ------- -------------- ------------- ------------- J.P. Morgan Research Enhanced Index ..................... PVA 0.45 0.45 0.45 Janus Core Equity ....................................... PVA 0.85 0.85 0.85 Janus Flexible Income ................................... PVA 0.80 0.80 0.80 Janus Growth ............................................ PVA 0.85 0.85 0.85 MFS Investors Growth Stock .............................. PVA 0.75 0.75 0.75 MFS Investors Trust ..................................... PVA 0.75 0.75 0.75 MFS Value ............................................... PVA 0.75 0.75 0.75 Morgan Stanley Focus Equity ............................. PVA 0.85 0.85 0.85 Oakhurst Balanced ....................................... PIC 0.55 0.50 0.45 Oakhurst Growth and Income .............................. PIC 0.70 0.65 0.60 Oakhurst Strategic Allocation ........................... PIC 0.60 0.55 0.50 Sanford Bernstein Global Value .......................... PVA 0.90 0.90 0.90 Sanford Bernstein Mid-Cap Value ......................... PVA 1.05 1.05 1.05 Sanford Bernstein Small Cap Value ....................... PVA 1.05 1.05 1.05 Seneca Mid-Cap Growth ................................... PIC 0.80 0.80 0.80 Seneca Strategic Theme .................................. PIC 0.75 0.70 0.65
RATE FOR FIRST RATE FOR NEXT RATE FOR OVER $1 BILLION $1 BILLION $2 BILLION -------------- ------------- ------------- Duff & Phelps Real Estate Securities .................... DPIM 0.75 0.70 0.65
Pursuant to a subadvisory agreement with the Fund, certain advisers delegate certain investment decisions and research functions with respect to the following Series to the subadvisor indicated, for which services each is paid a fee by the respective adviser.
SERIES SUBADVISER ------ ---------- Aberdeen International Aberdeen Fund Managers, Inc. ("Aberdeen") Aberdeen New Asia Aberdeen Fund Managers, Inc. ("Aberdeen") and Phoenix Investment Council ("PIC") AIM Mid-Cap Equity A I M Capital Management ("AIM") Alliance/Bernstein Growth + Value Alliance Capital Management ("Alliance") Deutsche Dow 30 Deutsche Asset-Management ("DAMI") Deutsche Nasdaq-100 Index(R) Deutsche Asset-Management ("DAMI") Engemann Capital Growth Roger Engemann & Associates ("Engemann") Engemann Nifty Fifty Roger Engemann & Associates ("Engemann") Engemann Small & Mid-Cap Growth Roger Engemann & Associates ("Engemann") Federated U.S. Government Bond Federated Investment Management Company ("Federated") J.P. Morgan Research Enhanced Index J.P. Morgan Investment Management, Inc. ("J.P. Morgan") Janus Core Equity Janus Capital Corporation ("Janus") Janus Flexible Income Janus Capital Corporation ("Janus") Janus Growth Janus Capital Corporation ("Janus") MFS Investors Growth Stock MFS Investment Management ("MFS") MFS Investors Trust MFS Investment Management ("MFS") MFS Value MFS Investment Management ("MFS") Morgan Stanley Focus Equity Morgan Stanley Asset Management ("MSAM") Sanford Bernstein Global Value Alliance Capital Management L.P. ("Alliance") Sanford Bernstein Mid-Cap Value Alliance Capital Management L.P. ("Alliance") Sanford Bernstein Small Cap Value Alliance Capital Management L.P. ("Alliance") Seneca Mid-Cap Growth Seneca Capital Management, LLC ("Seneca") Seneca Strategic Theme Seneca Capital Management, LLC ("Seneca")
PIC, PVA, and PAIA employ subadvisors to furnish portfolio management services to the Series, subject to Investment Subadvisory Agreements, the terms of which are described below. PIC is an indirect wholly-owned subsidiary of Phoenix Investment Partners, Ltd. DPIM is a subsidiary of Phoenix Investment Partners, Ltd. Roger Engemann & Associates, Inc. is a wholly-owned subsidiary of Pasadena Capital Corporation, which in turn is a wholly-owned subsidiary of Phoenix Investment Partners, Ltd. A majority of the equity interest of Seneca Capital Management LLC are owned by Phoenix Investment Partners, Ltd. Phoenix Invesment Partners in turn is a wholly-owned subsidiary of The Phoenix Companies, Inc. PIC has engaged Aberdeen Fund Managers, Inc. ("Aberdeen") as a subadvisor to the Aberdeen International. Aberdeen provides the day-to-day portfolio management for this Series. For implementing certain portfolio transactions and providing other services to this Series, PIC pays a monthly fee to Aberdeen based on an annual percentage of the average daily net assets of this Series of 0.375% on the first $250 million, 0.35% of such value between $250 million to $500 million and 0.325% of such value in excess of $500 million. Aberdeen is a wholly-owned subsidiary of Aberdeen Asset Management PLC, of which Phoenix Life Insurance Company ("Phoenix") owns approximately 20%. PAIA has engaged Aberdeen as a subadvisor to the Aberdeen New Asia. PAIA has also engaged PIC to implement domestic cash management for this Series. Aberdeen provides all other day-to-day investment operations for this Series including international portfolio management. For implementing certain portfolio transactions and providing research and other services to this Series, PAIA pays a monthly fee to Aberdeen based on an annual percentage of 0.40% the average daily net assets of this Series. 182 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2001 Pursuant to a subadvisory agreement between PVA and A I M Capital Management, Inc. ("AIM"), AIM is the subadvisor and furnishes portfolio management services to AIM Mid-Cap Equity. For the services provided, PVA pays a monthly fee to AIM based on an annual percentage of 0.50% of the average daily net assets of this Series. Pursuant to a subadvisory agreement between PVA and Alliance Capital Management L.P. ("Alliance"), Alliance is the subadvisor and furnishes portfolio management services to Alliance/Bernstein Growth + Value. Alliance will manage the portion of this Series' assets invested in value stocks through its Bernstein Investment Research and Management unit (the "Bernstein Unit"). For the services provided through December 31, 2002, PVA pays a monthly fee to Alliance based on an annual percentage of 0.50% of the average daily net assets of this Series. Pursuant to subadvisory agreements between PVA and Alliance, Alliance, through its Bernstein Unit, is the subadvisor and furnishes portfolio management services, including affecting the purchase and sales of securities and providing related advisory services, to the Sanford Bernstein Global Value, Sanford Bernstein Mid-Cap Value and Sanford Bernstein Small-Cap Value Series. For the services provided, PVA pays a monthly fee to Alliance based on an annual percentage of the average daily net assets of the series as follows:
RATE FOR FIRST RATE FOR NEXT RATE FOR NEXT RATE FOR NEXT RATE FOR OVER SERIES(1) $25 MILLION $25 MILLION $25 MILLION $100 MILLION $175 MILLION -------- -------------- ------------- ------------- ------------- ------------- Sanford Bernstein Global Value ................ 0.65% 0.50% 0.45% 0.40% 0.30% Sanford Bernstein Mid-Cap Value ............... 0.80 0.60 0.60 0.60 0.60
RATE FOR FIRST RATE FOR NEXT RATE FOR OVER $10 MILLION $10 MILLION $20 MILLION -------------- ------------- ------------- Sanford Bernstein Small-Cap Value ............. 1.00 0.875 0.75 (1) The series subadvised by the Bernstein Unit receive a 10% reduction in fees for all or a portion of these series' assets when certain assets of the series exceed $10 million. As a result of this reduction in fees, the current rate for calculating subadvisory fees for the Phoenix-Sanford Bernstein Small-Cap Value Series is 0.82% of average daily net assets.
Pursuant to a subadvisory agreement between PVA and Deutsche Asset Management, Inc. ("DAMI"), DAMI is the subadvisor and provides portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Deutsche Trust Dow 30 and Deutsche Nasdaq-100 Index(R) Series. For the services provided, PVA pays a monthly fee to DAMI (subject to a $100,000 annual minimum for each Series) based on an annual percentage of 0.10% of the average daily net assets of each of these Series. Pursuant to a subadvisory agreement between the Fund, PIC and Roger Engemann & Associates ("Engemann") with respect to the Engemann Nifty Fifty, and pursuant to subadvisory agreements between PIC and Engemann with respect to the Engemann Capital Growth and Phoenix-Engemann Small & Mid-Cap Growth, Engemann is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to these Series. For the services provided, PIC pays a monthly fee to Engemann for the Engemann Nifty Fifty based on an annual percentage of the average daily net assets of 0.45% up to $500 million and 0.35% of such value in excess of $500 million; for the Phoenix-Engemann Capital Growth Series based on an annual percentage of the average daily net assets of 0.10% up to $3 billion and 0.30% of such value in excess of $3 billion; and for Engemann Small & Mid-Cap Growth based on an annual percentage of the average daily net assets of 0.45%. Pursuant to a subadvisory agreement between PVA and Federated Investment Management Company ("Federated"), Federated is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Federated U.S. Government Bond. For the services provided, PVA pays a monthly fee to Federated based on an annual percentage of the average daily net assets of this Series of 0.30% up to $25 million, 0.25% of such value between $25 million and $50 million, 0.20% of such value between $50 million and $100 million and a negotiable fee on such value in excess of $100 million. Pursuant to a subadvisory agreement between the Fund, PVA, and J.P. Morgan Investment Management Inc. ("J.P. Morgan"), J.P. Morgan is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the J.P. Morgan Research Enhanced Index. For the services provided, PVA pays a monthly fee to J.P. Morgan based on an annual percentage of the average daily net assets of this Series of 0.25% up to $100 million and 0.20% on such value in excess of $100 million. Pursuant to a subadvisory agreement between PVA and Janus Capital Corporation ("Janus"), Janus is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Janus Core Equity, Janus Flexible Income and Janus Growth. For the services provided, PVA pays a monthly fee to Janus based on an annual percentage of the average daily net assets of each of these Series (calculated separately, not in the aggregate) of 0.55% up to $100 million, 0.50% of such value between $100 million and $500 million and 0.45% on such value in excess of $500 million. Pursuant to a subadvisory agreement between PVA and Massachusetts Financial Services Company, Inc., doing business as MFS Investment Management ("MFS"), MFS is the subadvisor and furnishes portfolio management services to the MFS Investors Growth Stock, MFS Investors Trust, and MFS Value. For the services provided, PVA pays a monthly fee to MFS based on an annual percentage of the combined average daily net assets of all three of these Series of 0.375% up to $500 million, 0.35% on such value between $500 million and $900 million, 0.325% on such value between $900 million and $1.5 billion and 0.25% on such value in excess of $1.5 billion. 183 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2001 Pursuant to a subadvisory agreement between PVA and Morgan Stanley Asset Management ("MSAM"), MSAM is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Morgan Stanley Focus Equity. For the services provided, PVA pays a monthly fee to MSAM based on an annual percentage of the average daily net assets of this Series of 0.55% up to $150 million, 0.45% on such value between $150 million and $300 million and 0.40% on such value in excess of $300 million. PAIA has engaged PIC as a subadvisor to the Aberdeen New Asia to implement domestic cash management for this series. Aberdeen Fund Managers, Inc. provides all other day-to-day investment operations for this Series including international portfolio management. For providing research and other domestic advisory services to the series, PAIA pays a monthly fee to PIC based on an annual percentage of 0.30% of the average daily net assets of this Series. Pursuant to a subadvisory agreement between the Fund, PIC and Seneca Capital Management, LLC ("Seneca") with respect to the Seneca Mid-Cap Growth, and pursuant to a subadvisory agreement between PIC and Seneca with respect to the Seneca Strategic Theme, Seneca is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Seneca Mid-Cap Growth and Seneca Strategic Theme. For the services provided, PIC pays a monthly fee to Seneca for the Seneca Mid-Cap Growth based on an annual percentage of the average daily net assets of 0.40%; and for the Seneca Strategic Theme based on an annual percentage of the average daily net assets of 0.10% up to $201 million, 0.375% of such value between $202 million and $1 billion, 0.35% of such value between $1 billion and $2 billion and 0.325% on such value in excess of $2 billion. The advisors have agreed to reimburse the Fund for certain operating expenses (excluding management fees, interest, taxes, brokerage fees and commissions) for all series. For the year ended December 31, 2001, the portion of these expenses to be paid by each series is listed in the following table. All expense reimbursement arrangements may be discontinued at any time.
MAXIMUM OPERATING MAXIMUM OPERATING EXPENSE THROUGH EXPENSE EFFECTIVE SERIES 12/31/01 1/1/02 ------ ----------------- ----------------- Aberdeen International ................................................... 0.40% 0.40% Aberdeen New Asia ........................................................ 0.25 0.30 AIM Mid-Cap Equity ....................................................... 0.20 0.20 Alliance/Bernstein Growth + Value ........................................ 0.20 0.20 Deutsche Dow 30 .......................................................... 0.15 0.20 Deutsche Nasdaq-100 Index(R) ............................................. 0.15 0.20 Duff & Phelps Real Estate Securities ..................................... 0.25 0.30 Engemann Capital Growth .................................................. 0.15 0.20 Engemann Nifty Fifty ..................................................... 0.15 0.20 Engemann Small & Mid-Cap Growth .......................................... 0.25 0.30 Federated U.S Government Bond ............................................ 0.25* 0.25 Goodwin Money Market ..................................................... 0.15 0.20 Goodwin Multi-Sector Fixed Income ........................................ 0.15 0.20 Hollister Value Equity ................................................... 0.15 0.20 J.P. Morgan Research Enhanced Index ...................................... 0.10 0.15 Janus Core Equity ........................................................ 0.15 0.20 Janus Flexible Income .................................................... 0.15 0.20 Janus Growth ............................................................. 0.15 0.20 MFS Investors Growth Stock ............................................... 0.20 0.20 MFS Investors Trust ...................................................... 0.20 0.20 MFS Value ................................................................ 0.20 0.20 Morgan Stanley Focus Equity .............................................. 0.15 0.20 Oakhurst Balanced ........................................................ 0.15 0.20 Oakhurst Growth & Income ................................................. 0.15 0.20 Oakhurst Strategic Allocation ............................................ 0.15 0.20 Sanford Bernstein Global Value ........................................... 0.15 0.20 Sanford Bernstein Mid-Cap Value .......................................... 0.15 0.20 Sanford Bernstein Small-Cap Value ........................................ 0.15 0.20 Seneca Mid-Cap Growth .................................................... 0.25 0.30 Seneca Strategic Theme ................................................... 0.25 0.30 *Prior to May 1, 2001, this rate was 0.15%.
As Financial Agent to the Fund and to each Series, Phoenix Equity Planning Corporation ("PEPCO"), an indirect majority-owned subsidiary of Phoenix, receives a financial agent fee equal to the sum of (1) the documented cost of fund accounting and related services provided by PFPC, Inc. (subagent to PEPCO), plus (2) the documented cost to PEPCO to provide financial reporting, tax services and oversight of subagent's performance. For the year ended December 31, 2001, financial agent fees were $2,819,775 of which PEPCO received $930,968. The current fee schedule of PFPC, Inc. ranges from 0.085% to 0.0125% of the average daily net asset values of the Fund. Certain minimum fees and fee waivers may apply. For the year ended December 31, 2001, the Fund paid PXP Securities Corp., a wholly owned subsidiary of Phoenix, brokerage commissions of $167,394 in connection with portfolio transactions effected by it. 184 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2001 At December 31, 2001, Phoenix and affiliates held shares in The Phoenix Edge Series Fund which had the following aggregate value: AIM Mid-Cap Equity ............................................ $3,189,675 Alliance/Bernstein Growth + Value ............................. 2,669,973 Deutsche Dow 30 ............................................... 4,436,095 Deutsche Nasdaq-100 Index(R) .................................. 2,078,790 Engemann Small & Mid-Cap Growth ............................... 2,442,856 Federated U.S. Government Bond ................................ 5,988,880 Janus Core Equity ............................................. 701,225 Janus Flexible Income ......................................... 5,563,875 MFS Investors Growth Stock .................................... 3,199,854 MFS Investors Trust ........................................... 3,120,675 MFS Value ..................................................... 3,164,970 Morgan Stanley Focus Equity ................................... 3,820,385 Sanford Bernstein Global Value ................................ 6,710,935 Sanford Bernstein Mid-Cap Value ............................... 2,179,092 Sanford Bernstein Small-Cap Value ............................. 2,430,278 NOTE 4--PURCHASES AND SALES OF SECURITIES Purchases and sales of securities during the year ended December 31, 2001, (excluding U.S. Government securities, short-term securities, options written and forward currency contracts) aggregated to the following: PURCHASES SALES ------------ ------------ Aberdeen International ........................ $137,128,949 $147,161,220 Aberdeen New Asia ............................. 5,677,280 5,926,749 AIM Mid-Cap Equity ............................ 3,169,676 327,409 Alliance/Bernstein Growth + Value ............. 3,415,313 25,256 Deutsche Dow 30 ............................... 15,670,478 7,030,146 Deutsche Nasdaq-100 Index(R) .................. 12,625,659 6,150,605 Duff & Phelps Real Estate Securities .......... 20,056,502 12,870,145 Engemann Capital Growth ....................... 647,382,008 749,765,286 Engemann Nifty Fifty .......................... 29,267,240 31,015,804 Engemann Small & Mid-Cap Growth ............... 12,362,629 2,934,641 Goodwin Multi-Sector Fixed Income ............. 203,352,129 191,362,512 Hollister Value Equity ........................ 208,306,680 155,449,593 J.P. Morgan Research Enhanced Index ........... 47,756,939 42,536,573 Janus Core Equity ............................. 25,070,816 15,765,790 Janus Flexible Income ......................... 33,739,629 26,682,053 Janus Growth .................................. 43,112,997 22,771,409 MFS Investors Growth Stock .................... 4,666,309 1,121,222 MFS Investors Trust ........................... 3,259,886 128,012 MFS Value ..................................... 4,686,763 314,823 Morgan Stanley Focus Equity ................... 11,359,900 8,686,727 Oakhurst Balanced ............................. 81,658,543 94,884,487 Oakhurst Growth and Income .................... 45,660,578 32,170,911 Oakhurst Strategic Allocation ................. 117,739,505 133,952,649 Sanford Bernstein Global Value ................ 4,000,580 1,856,072 Sanford Bernstein Mid-Cap Value ............... 34,611,438 7,897,377 Sanford Bernstein Small Cap Value ............. 14,133,393 1,539,000 Seneca Mid-Cap Growth ......................... 109,735,782 89,545,892 Seneca Strategic Theme ........................ 257,921,225 249,614,461 There were no purchases or sales of such securities in the Phoenix-Federated U.S. Government Bond Series or the Phoenix-Goodwin Money Market Series. Purchases and sales of long-term U.S. Government securities during the year ended December 31, 2001, aggregated the following: PURCHASES SALES ------------ ------------ Engemann Capital Growth ....................... $ 7,595,721 $ 5,000,000 Federated U.S. Government Bond ................ 11,542,481 7,643,352 Goodwin Multi-Sector Fixed Income ............. 108,583,592 111,423,358 J.P. Morgan Research Enhanced Index ........... 180,053 -- Janus Core Equity ............................. 646,294 412,680 Janus Flexible Income ......................... 36,587,798 29,746,419 Oakhurst Balanced ............................. 28,189,911 27,092,819 Oakhurst Strategic Allocation ................. 47,017,178 51,523,588 185 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2001 NOTE 5--FUTURES CONTRACTS At December 31, 2001, the following Series had entered into futures contracts as follows:
VALUE OF NET NUMBER CONTRACTS MARKET UNREALIZED EXPIRATION OF WHEN VALUE OF APPRECIATION DATE CONTRACTS OPENED CONTRACTS (DEPRECIATION) ---------- --------- --------- ---------- -------------- Deutsche Dow 30 Dow Jones Industrial Average Index .................... March '02 9 $ 897,020 $ 897,120 $ 100 Deutsche Nasdaq-100 Index(R) Nasdaq-100 Index ...................................... March '02 7 224,890 221,690 (3,200) J.P. Morgan Research Enhanced Index Standard and Poor's 500 Index ......................... March '02 5 1,433,700 1,436,500 2,800
NOTE 6--FORWARD CURRENCY CONTRACTS As of December 31, 2001, Phoenix-Sanford Bernstein Global Value Series had entered into the following forward currency contract which contractually obligate the Series to deliver currencies at specified dates:
NET UNREALIZED SETTLEMENT APPRECIATION CONTRACTS TO DELIVER IN EXCHANGE FOR DATE VALUE (DEPRECIATION) -------------------- --------------- ---------- -------- -------------- Sanford Bernstein Global Value JPY (12,000,000) ................................................... US$ (98,385) 3/20/02 $(92,065) $6,320 HKD (100,000) ....................................................... US$ (12,821) 3/20/02 (12,819) 2 ------ $6,322 ------ JPY = Japanese Yen HKD = Hong Kong Dollar US $ = U.S. Dollar
NOTE 7--CREDIT RISK AND CONCENTRATIONS In countries with limited or developing markets, investments may present greater risks than in more developed markets and the prices of such investments may be volatile. The consequences of political, social or economic changes in these markets may have disruptive effects on the market prices of these investments and the income they generate, as well as a Fund's ability to repatriate such amounts. High yield-high risk securities typically entail greater price volatility and principal and interest rate risk. There is a greater chance that an issuer will not be able to make principal and interest payments on time. Analysis of the creditworthiness of issuers of high yield securities may be complex, and as a result, it may be more difficult for the subadviser to accurately predict risk. Certain Series invest a high percentage of their assets in specific sectors of the market in their pursuit of a greater investment return. Fluctuations in these sectors of concentration may have a greater impact to the Series, positive or negative, than if the Series did not concentrate its investments in such sectors. NOTE 8--FEDERAL INCOME TAX INFORMATION The following Series have capital loss carryovers which may be used to offset future capital gains.
EXPIRATION YEAR ---------------------------------------------------------------- 2006 2007 2008 2009 TOTAL ---------- ------------ ---------- ------------ ------------- Aberdeen International .................................. $ -- $ -- $ -- $ 25,954,026 $ 25,954,026 Aberdeen New Asia ....................................... 1,280,431 -- -- 295,786 1,576,217 Deutsche Nasdaq-100 Index(R) ............................ -- -- 35,822 1,090,517 1,126,339 Engemann Capital Growth ................................. -- -- -- 281,539,240 281,539,240 Engemann Nifty Fifty .................................... 30,157 590,466 5,141,805 11,718,126 17,480,554 Engemann Small & Mid-Cap Growth ......................... -- -- 302,334 1,838,456 2,140,790 Duff & Phelps Real Estate Securities .................... -- 20,308 815,184 -- 835,492 Goodwin Multi-Sector Fixed Income ....................... 566,989 15,256,521 6,659,630 4,980,791 27,463,931 Hollister Value Equity .................................. -- -- -- 5,410,594 5,410,594 J.P. Morgan Research Enhanced Index ..................... -- -- -- 5,915,199 5,915,199 Janus Core Equity ....................................... -- -- 394,837 3,269,308 3,664,145 Janus Growth ............................................ -- -- 1,736,897 15,462,439 17,199,336 Morgan Stanley Focus Equity ............................. -- -- 179,842 1,190,743 1,370,585 Oakhurst Balanced ....................................... -- -- -- 3,945,882 3,945,882 Oakhurst Growth and Income .............................. -- -- -- 3,195,522 3,195,522 Oakhurst Strategic Allocation ........................... -- -- -- 6,255,397 6,255,397 Seneca Mid Growth ....................................... -- -- -- 21,438,903 21,438,903 Seneca Strategic Theme .................................. -- -- -- 74,025,180 74,025,180
186 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2001 The following Series utilized losses deferred in prior years against 2001 capital gains as follows: Duff & Phelps Real Estate Securities ........................... $2,031,163 Goodwin Money Market ........................................... 2,831 Janus Flexible Income .......................................... 73,339 Sanford Bernstein Mid-Cap Value ................................ 1,105,896 Under current tax law, capital and foreign currency losses realized after October 31 may be deferred and treated as occurring on the first day of the following tax year. For the year ended December 31, 2001, the following Series deferred post-October losses as follows: Aberdeen International ....................................... $ 5,911,700 Aberdeen New Asia ............................................ 648,989 Alliance/Bernstein Growth + Value ............................ 943 Deutsche Nasdaq-100 Index(R) ................................. 337,458 Engemann Nifty Fifty ......................................... 2,087,981 Engemann Small & Mid-Cap Growth .............................. 323,132 Federated U.S. Government Bond ............................... 4,038 Goodwin Multi-Sector Fixed Income ............................ 1,180,328 Hollister Value Equity ....................................... 825,372 J.P. Morgan Research Enhanced Index .......................... 1,074,127 Janus Core Equity ............................................ 125,426 Janus Flexible Income ........................................ 34,358 Janus Growth ................................................. 4,246,969 Morgan Stanley Focus Equity .................................. 99,469 Oakhurst Growth and Income ................................... 372,766 Sanford Bernstein Global Value ............................... 5,605 Seneca Mid-Cap Growth ........................................ 758,208 Seneca Strategic Theme ....................................... 2,450,131 For the year ended December 31, 2001, prior year post-October capital and currency losses deferred were utilized as follows: Aberdeen International ....................................... $ 105,644 Aberdeen New Asia ............................................ 3,375 Deutsche Nasdaq-100 Index(R) ................................. 111,861 Engemann Capital Growth ...................................... 47,570,113 Engemann Nifty Fifty ......................................... 222,891 Engemann Small & Mid-Cap Growth .............................. 156,457 Goodwin Multi-Sector Fixed Income ............................ 9,649 Hollister Value Equity ....................................... 16,146 J.P. Morgan Research Enhanced Index .......................... 139,552 Janus Core Equity ............................................ 331,764 Janus Flexible Income ........................................ 113,944 Morgan Stanley Focus Equity .................................. 79,248 Oakhurst Balanced ............................................ 2,362,503 Oakhurst Growth and Income ................................... 242,627 Oakhurst Strategic Allocation ................................ 3,779,822 Sanford Bernstein Global Value ............................... 10,069 Sanford Bernstein Mid-Cap Value .............................. 7,332 Sanford Bernstein Small-Cap Value ............................ 2,290 Seneca Mid-Cap Growth ........................................ 2,603,886 Seneca Strategic Theme ....................................... 5,537,472 As of December 31, 2001, the components of distributable earnings on a tax basis (excluding unrealized appreciation (depreciation), which are disclosed in the respective schedule of investments) were as follows:
UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM INCOME CAPITAL GAINS ------------- ------------- Aberdeen International ...................................... $ 458,964 $ -- Aberdeen New Asia ........................................... 124,014 -- AIM Mid-Cap Equity .......................................... 6,409 -- Alliance/Bernstein Growth + Value ........................... -- -- Deutsche Dow 30 ............................................. 28,104 21,851 Deutsche Nasdaq-100 Index(R) ................................ -- -- Duff & Phelps Real Estate Securities ........................ 181,071 -- Engemann Capital Growth ..................................... -- -- Engemann Nifty Fifty ........................................ -- -- Engemann Small & Mid-Cap Growth ............................. -- -- Federated U.S. Government Bond .............................. 23,754 -- Goodwin Money Market ........................................ -- -- Goodwin Multi-Sector Fixed Income ........................... 1,325,991 -- Hollister Value Equity ...................................... 136,855 -- J.P. Morgan Research Enhanced Index ......................... 103,661 -- Janus Core Equity ........................................... -- --
187 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2001
UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM INCOME CAPITAL GAINS ------------- ------------- Janus Flexible Income ....................................... $ 16,381 $ -- Janus Growth ................................................ -- -- MFS Investors Growth Stock .................................. 610 -- MFS Investors Trust ......................................... 9,331 -- MFS Value ................................................... 10,444 144 Morgan Stanley Focus Equity ................................. -- -- Oakhurst Balanced ........................................... 535,974 -- Oakhurst Growth and Income .................................. 172,435 -- Oakhurst Strategic Allocation ............................... 806,279 -- Sanford Bernstein Global Value .............................. 2,049 -- Sanford Bernstein Mid-Cap Value ............................. 179,739 192,665 Sanford Bernstein Small-Cap Value ........................... 19,236 6,036 Seneca Mid-Cap Growth ....................................... -- -- Seneca Strategic Theme ...................................... -- --
The differences between the book basis and tax basis components of distributable earnings relate principally to the timing of recognition of income and gains for federal income tax purposes. Short-term gain distributions reported in the statement of changes in net assets are reported as ordinary income for federal tax purposes. NOTE 9--RECLASSIFICATION OF CAPITAL ACCOUNTS For financial reporting purposes, book basis capital accounts are adjusted to reflect the tax character of permanent book/tax differences. For the year ended December 31, 2001, the Series recorded the following permanent reclassifications which arose primarily from nondeductible current net operating losses, treatment of foreign currency transactions, non-taxable dividends, premium amortization and investments in passive foreign investment companies. The reclassifications have no impact on the net assets or net asset value of the Series. The following Series recorded reclassifications to increase (decrease) the accounts listed below:
UNDISTRIBUTED ACCUMULATED CAPITAL PAID IN NET INVESTMENT NET REALIZED ON SHARES OF SERIES INCOME (LOSS) GAIN (LOSS) BENEFICIAL INTEREST ------ -------------- ------------ ------------------- Aberdeen International ......................................... $(205,030) $ 205,030 $ -- Aberdeen New Asia .............................................. 14,814 (14,814) -- Alliance/Bernstein Growth + Value .............................. 60 -- (60) Deutsche Nasdaq-100 Index(R) ................................... 28,138 -- (28,138) Duff & Phelps Real Estate Securities ........................... (7,029) 7,029 -- Engemann Capital Growth ........................................ 32,052 (877) (31,175) Engemann Nifty Fifty ........................................... 237,765 -- (237,765) Engemann Small & Mid-Cap Growth ................................ 57,377 -- (57,377) Federated U.S. Government Bond ................................. 32,567 (13,455) (19,112) Goodwin Money Market ........................................... (898) 898 -- Goodwin Multi-Sector Fixed Income .............................. 445,267 (439,963) (5,304) Hollister Value Equity ......................................... (11,283) 9,770 1,513 Janus Core Equity .............................................. 22,930 408 (23,338) Janus Flexible Income .......................................... 351 2,556 (2,907) Janus Growth ................................................... 176,323 -- (176,323) MFS Investors Growth Stock ..................................... 178 (178) -- MFS Investors Trust ............................................ 633 (633) -- MFS Value ...................................................... (220) 220 -- Morgan Stanley Focus Equity .................................... 17,294 -- (17,294) Oakhurst Balanced .............................................. 30,244 (4,863) (25,381) Oakhurst Growth and Income ..................................... -- (479) 479 Oakhurst Strategic Allocation .................................. 45,563 (12,509) (33,054) Sanford Bernstein Global Value ................................. (3,471) 3,471 -- Sanford Bernstein Mid-Cap Value ................................ (33,664) 25,843 7,821 Sanford Bernstein Small Cap Value .............................. (8,253) 6,449 1,804 Seneca Mid-Cap Growth .......................................... 357,510 (57,742) (299,768) Seneca Strategic Theme ......................................... 490,864 1,317 (492,181)
188 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2001 NOTE 10--SUBSEQUENT EVENT On November 13, 2001, The Board of Trustees of The Fund approved a Plan of Reorganization to merge three Series of the Fund into other existing series of the Fund. Each discontinued Series will be merged into a corresponding surviving series as follows: DISCONTINUED SERIES SURVIVING SERIES ------------------- ---------------- Engemann Nifty Fifty Engemann Capital Growth Janus Core Equity Janus Growth Oakhurst Balanced Oakhurst Strategic Allocation If the shareholders approve the Plan of Reorganization each discontinued Series will transfer all or substantially all of its assets and its liabilities to the corresponding surviving Series. In exchange, shareholders of the discontinued Series will receive a proportional number of shares in the surviving Series. The shareholders of each discontinued Series must approve the Plan of Reorganization before any transaction can take place. The next meeting of the Fund's shareholders will be held in the Spring of 2002, at which time, these matters will be submitted for a shareholder vote. The Board of Trustees of the Fund voted at their August 28, 2001 meeting that shares of the Phoenix-Federated U.S. Government Bond Series will no longer be available for sale except to contract/policy holders who already had account value allocated to the subaccounts investing in the Series as of February 16, 2001. On September 18, 2001, The Board of Trustees of the Fund approved the submission of an application for an Order of Approval with the Securities and Exchange Commission to substitute shares of an outside managed fund for shares of the Phoenix-Federated U.S. Government Bond Series. Upon approval of the application and the subsequent transaction, the Phoenix-Federated U.S. Government Bond Series will be closed. - -------------------------------------------------------------------------------- TAX INFORMATION NOTICE (UNAUDITED) For the fiscal year ended December 31, 2001, the following Series designated long-term capital gain dividends as follows: Aberdeen International ................................... $ 3,087,474 Deutsche Dow 30 .......................................... 137,185 Engemann Capital Growth .................................. 24,334,683 Federated U.S. Government Bond ........................... 314,062 J.P. Morgan Research Enhanced Index ...................... 676,397 Janus Flexible Income .................................... 69,856 MFS Investors Trust ...................................... 5,103 MFS Value ................................................ 144 Oakhurst Balanced ........................................ 1,521,676 Oakhurst Growth and Income ............................... 265,629 Oakhurst Strategic Allocation ............................ 4,043,514 Sanford Bernstein Mid-Cap Value .......................... 397,320 Sanford Bernstein Small Cap Value ........................ 6,036 - -------------------------------------------------------------------------------- This report is not authorized for distribution to prospective investors in The Phoenix Edge Series Fund unless preceded or accompanied by any effective Prospectus which includes information concerning the sales charges, Fund's record and other pertinent information. 189 REPORT OF INDEPENDENT ACCOUNTANTS (LOGO)] PRICEWATERHOUSECOOPERS [GRAPHIC OMITTED] TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF THE PHOENIX EDGE SERIES FUND In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of each of the 30 series constituting The Phoenix Edge Series Fund (hereafter referred to as the "Fund") at December 31, 2001, the results of each of their operations, the changes in each of their net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2001 by correspondence with the custodians and brokers, provide a reasonable basis for our opinion. /S/ PRICEWATERHOUSECOOPERS, LLP Boston, Massachusetts February 8, 2002 THE PHOENIX EDGE SERIES FUND RESULTS OF SHAREHOLDER MEETING (UNAUDITED) A special meeting of Shareholders of The Phoenix Edge Series Fund was held on October 29, 2001 to approve the following matters: 1. To approve amendments to the fundamental investment restrictions of each Series and conforming changes to the Declaration of Trust as detailed below (items 1A -- 1M). 2. To approve an amendment to the Fund's Declaration of Trust that would remove the provisions regarding fundamental investment restrictions from the Declaration of Trust. 3. To approve the Fund's reliance on "manager of managers" relief under which the Fund's investment advisors, subject to the approval of the Board of Trustees, may, among other things, appoint, replace or terminate subadvisors recommended by each Series' investment advisor or enter into or materially amend existing subadvisory agreements without shareholder approval. 4. To approve the amendment of the investment objective of the Phoenix-Janus Core Equity Series (formerly Phoenix-Janus Equity Income Series) to eliminate the income component of the investment objective. On the record date of August 31, 2001, the shares outstanding and percentage of the shares outstanding and entitled to vote that were present by proxy were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------ SERIES SHARES OUTSTANDING PERCENTAGE PRESENT BY PROXY - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 103,371,500.9868 100% - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 15,177,103.1648 100% - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,942,663.7769 100% - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 14,272,788.1118 100% - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 20,281,813.2845 100% - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 315,000,072.8369 100% - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 53,515,406.2928 100% - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 13,875,131.9466 100% - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 10,212,160.4715 100% - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 118,705,935.0011 100% - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 73,681,221.1642 100% - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 44,601,760.7357 100% - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 76,836,790.1507 100% - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 17,392,859.0384 100% - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 13,836,894.5159 100% - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 70,629,534.8323 100% - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 9,099,392.6817 100% - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 117,414,655.4480 100% - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 89,651,903.4884 100% - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 106,766,567.5896 100% - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,976,128.6377 100% - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 30,992,034.7472 100% - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,698,291.2396 100% - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 41,728,815.1279 100% - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 87,744,343.9470 100% - ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF VOTES 1A. Approve amendments to the fundamental investment restrictions of each Series and conforming changes to the Declaration of Trust as follows: A Series may not, with respect to 75% of its total assets, purchase securities of an issuer (other than the U.S. Government, its agencies, instrumentalities or authorities or repurchase agreements collateralized by U.S. Government securities and other investment companies), if: (a) such purchase would, at the time, cause more than 5% of the Series' total assets, taken at market value, to be invested in the securities of such issuer; or (b) such purchase would, at the time, result in more than 10% of the outstanding voting securities of such issuer being held by the Series. 191 THE PHOENIX EDGE SERIES FUND RESULTS OF SHAREHOLDER MEETING (CONTINUED) (UNAUDITED) This restriction does not apply to the Deutsche Dow 30, Deutsche Nasdaq-100 Index(R), Duff & Phelps Real Estate Securities or Morgan Stanley Focus Equity.
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 96,495,152 1,748,095 5,128,255 - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 14,537,220 176,011 463,872 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,140,729 194,529 607,405 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 12,467,719 614,157 1,190,912 - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 18,509,250 355,076 1,417,487 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 287,102,734 11,018,747 16,878,592 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 48,515,562 1,909,418 3,090,425 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 12,096,560 79,423 1,699,149 - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 9,118,980 303,113 790,067 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 109,250,460 2,799,681 6,655,794 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 66,644,643 1,935,761 5,100,817 - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 40,438,515 1,159,032 3,004,213 - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 69,266,201 3,179,923 4,390,667 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 14,575,333 1,289,717 1,527,809 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 12,395,888 248,650 1,192,357 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 60,640,821 3,739,034 6,249,680 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 8,544,059 0 555,334 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 106,235,661 2,885,781 8,293,214 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 81,593,089 3,199,464 4,859,350 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 99,274,964 2,951,098 4,540,506 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,638,960 239,139 98,030 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 27,693,061 953,265 2,345,708 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,109,831 140,527 447,933 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 37,980,575 850,140 2,898,101 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 81,552,646 2,452,758 3,738,940 - ------------------------------------------------------------------------------------------------------------------------------------
1B. Approve amendments to the fundamental investment restrictions of each Series and conforming changes to the Declaration of Trust as follows: A Series may not purchase securities in a given industry if, after giving effect to the purchase, more than 25% of its total assets would be invested in the securities of one or more issuers conducting business activities in the same industry (excluding the U.S. Government or its agencies or instrumentalities). This restriction does not apply to the Duff & Phelps Real Estate Securities, Deutsche Dow 30, Deutsche Nasdaq-100 Index(R) or Morgan Stanley Focus Equity. In addition, the Goodwin Money Market and Oakhurst Strategic Allocation may invest more than 25% of their assets in the banking industry.
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 96,557,765 1,544,163 5,269,573 - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 14,550,012 163,219 463,872 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,140,729 194,529 607,405 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 12,303,730 721,388 1,247,671 - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 18,509,250 355,076 1,417,487 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 286,950,338 11,095,582 16,954,153 - ------------------------------------------------------------------------------------------------------------------------------------
192 THE PHOENIX EDGE SERIES FUND RESULTS OF SHAREHOLDER MEETING (CONTINUED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 48,502,933 1,910,432 3,102,041 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 12,096,560 79,423 1,699,149 - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 9,163,271 258,823 790,067 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 109,174,866 2,638,872 6,892,197 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 66,663,698 1,843,765 5,173,758 - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 40,480,536 1,073,341 3,047,883 - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 69,817,920 2,628,204 4,390,667 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 14,606,776 1,256,611 1,529,473 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 12,471,116 201,720 1,164,058 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 60,701,325 3,712,121 6,216,088 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 8,544,059 0 555,334 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 105,999,466 2,872,720 8,542,470 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 81,806,991 2,938,726 4,906,186 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 99,492,083 2,733,979 4,540,506 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,638,960 239,139 98,030 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 27,308,322 1,338,005 2,345,708 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,011,056 239,302 447,933 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 38,039,185 790,747 2,898,883 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 81,745,088 2,239,778 3,759,478 - ------------------------------------------------------------------------------------------------------------------------------------
1C. Approve amendments to the fundamental investment restrictions of each Series and conforming changes to the Declaration of Trust as follows: A Series may not issue senior securities in contravention of the 1940 Act. Activities permitted by SEC exemptive orders or staff interpretations shall not be deemed prohibited by this restriction
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 96,301,351 1,850,344 5,219,806 - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 14,533,321 179,417 464,365 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,140,729 194,529 607,405 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 12,326,453 698,664 1,247,671 - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 18,509,250 355,076 1,417,487 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 284,399,726 13,191,609 17,408,738 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 48,095,838 2,277,640 3,141,928 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 12,096,560 79,423 1,699,149 - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 9,036,978 385,115 790,067 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 107,262,157 4,550,337 6,893,441 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 65,971,206 2,536,257 5,173,758 - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 40,062,760 1,487,940 3,051,060 - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 68,916,902 3,529,221 4,390,667 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 13,984,495 1,880,555 1,527,809 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 12,395,888 248,650 1,192,357 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 60,188,798 4,202,597 6,238,140 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 8,544,059 0 555,334 - ------------------------------------------------------------------------------------------------------------------------------------
193 THE PHOENIX EDGE SERIES FUND RESULTS OF SHAREHOLDER MEETING (CONTINUED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 105,545,626 3,550,816 8,318,214 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 81,102,215 3,643,502 4,906,186 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 99,264,417 2,961,644 4,540,506 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,444,079 434,020 98,030 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 27,659,035 987,292 2,345,708 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,101,235 149,124 447,933 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 37,494,440 1,335,492 2,898,883 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 81,024,339 2,960,528 3,759,478 - ------------------------------------------------------------------------------------------------------------------------------------
1D. Approve amendments to the fundamental investment restrictions of each Series and conforming changes to the Declaration of Trust as follows: A Series may not borrow money, except (i) in amounts not to exceed one third of the value of the Series' total assets (including the amount borrowed) from banks, and (ii) up to an additional 5% of its total assets from banks or other lenders for temporary purposes. For purposes of this restriction, (a) investment techniques such as margin purchases, short sales, forward commitments, and roll transactions, (b) investments in instruments such as futures contracts, swaps, and options, and (c) short-term credits extended in connection with trade clearances and settlement shall not constitute borrowing.
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 95,826,303 2,284,166 5,261,031 - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 14,475,697 203,884 497,523 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,140,729 194,529 607,405 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 12,252,397 829,479 1,190,912 - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 18,330,194 448,664 1,502,955 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 282,583,501 15,473,876 16,942,696 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 47,791,833 2,609,127 3,114,447 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 12,096,560 79,423 1,699,149 - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 9,058,914 338,950 814,297 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 103,712,715 8,338,669 6,654,551 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 65,794,944 2,785,460 5,100,817 - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 39,853,784 1,743,763 3,004,213 - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 56,604,769 12,738,914 4,493,107 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 13,850,289 2,015,316 1,527,254 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 124,711,116 173,422 1,192,357 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 59,720,049 4,641,462 6,268,024 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 8,544,059 0 555,334 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 104,591,099 4,587,441 8,236,115 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 80,317,971 4,350,938 4,982,994 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 98,773,206 3,071,013 4,922,349 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,444,079 434,020 98,030 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 26,709,818 1,936,509 2,345,708 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,101,235 149,124 447,933 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 36,935,944 1,887,129 2,905,743 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 80,472,035 3,232,042 4,040,268 - ------------------------------------------------------------------------------------------------------------------------------------
194 THE PHOENIX EDGE SERIES FUND RESULTS OF SHAREHOLDER MEETING (CONTINUED) (UNAUDITED) 1E. Approve amendments to the fundamental investment restrictions of each Series and conforming changes to the Declaration of Trust as follows: A Series may not underwrite the secuities issued by other persons, except to the extent that, in connection with the disposition of portfolio securities, a Series may be deemed to be an underwriter under the applicable law.
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 96,418,213 1,773,233 5,180,055 - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 14,546,606 166,625 463,872 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,140,729 194,529 607,405 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 12,456,230 612,107 1,204,451 - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 18,447,066 417,260 1,417,487 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 285,940,954 11,568,230 17,490,889 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 48,366,722 2,013,521 3,135,163 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 12,096,560 79,423 1,699,149 - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 9,083,144 338,950 790,067 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 107,377,704 4,388,993 6,939,238 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 66,717,640 1,862,764 5,100,817 - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 40,432,285 1,165,263 3,004,213 - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 69,851,681 2,569,053 4,416,056 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 14,292,917 1,558,165 1,541,777 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 12,498,619 145,919 1,192,357 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 60,468,857 3,910,998 6,249,680 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 8,544,059 0 555,334 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 106,206,177 2,889,970 8,318,508 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 81,694,070 3,010,006 4,947,828 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 99,389,731 2,812,334 4,564,503 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,444,079 434,020 98,030 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 26,878,497 1,325,533 2,788,005 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,101,235 74,955 522,101 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 38,061,994 768,720 2,898,101 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 81,688,621 2,207,183 3,848,539 - ------------------------------------------------------------------------------------------------------------------------------------
1F. Approve amendments to the fundamental investment restrictions of each Series and conforming changes to the Declaration of Trust as follows: A Series may not purchase or sell real estate, except that a series may (i) acquire or lease office space for its own use, (ii) invest in securities of issuers that invest in real estate or interests therein, (iii) invest in mortgage-related securities and other securities that are secured by real estate or interests therein, or (iv) hold and sell real estate acquired by the Series as a result of the ownership of securities.
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 96,509,013 1,679,946 5,182,541 - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 14,552,544 160,686 463,872 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,140,729 194,529 607,405 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 12,279,425 788,912 1,204,451 - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 18,509,250 355,076 1,417,487 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 286,116,889 11,991,473 16,891,711 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 48,389,421 2,033,160 3,092,825 - ------------------------------------------------------------------------------------------------------------------------------------
195 THE PHOENIX EDGE SERIES FUND RESULTS OF SHAREHOLDER MEETING (CONTINUED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 12,096,560 79,423 1,699,149 - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 9,163,271 258,823 790,067 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 109,003,056 2,767,370 6,935,509 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 66,708,577 1,871,827 5,100,817 - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 40,426,858 1,170,689 3,004,213 - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 69,084,478 3,361,645 4,390,667 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 14,480,723 1,369,807 1,542,329 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 12,471,116 201,720 1,164,058 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 60,659,450 3,754,547 6,215,538 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 8,544,059 0 555,334 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 105,257,164 3,879,901 8,277,590 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 81,563,827 3,219,762 4,868,314 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 99,381,001 2,845,060 4,540,506 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,638,960 239,139 98,030 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 27,625,212 578,818 2,788,005 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,108,644 67,546 522,101 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 37,660,897 1,169,817 2,898,101 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 81,399,342 2,603,585 3,741,417 - ------------------------------------------------------------------------------------------------------------------------------------
1G. Approve amendments to the fundamental investment restrictions of each Series and conforming changes to the Declaration of Trust as follows: A Series may not make loans, except that a Series may (i) lend portfolio securities, (ii) enter into repurchase agreements, (iii) purchase all or a portion of an issue of debt securities, bank loan participation interests, bank certificates of deposit, bankers' acceptances, debentures or other securities, whether or not the purchase is made upon the original issuance of the securities, and (iv) participate in an interfund lending program with other registered investment companies.
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 95,908,506 2,279,662 5,183,333 - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 14,457,251 255,488 464,365 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,140,729 194,529 607,405 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 12,379,711 702,165 1,190,912 - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 18,415,662 448,664 1,417,487 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 284,013,696 13,950,931 17,035,446 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 48,119,913 2,276,373 3,119,121 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 12,096,560 79,423 1,699,149 - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 9,083,144 338,950 790,067 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 103,636,633 8,178,313 6,890,989 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 65,755,294 2,825,110 5,100,817 - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 39,936,669 1,660,878 3,004,213 - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 59,326,726 13,119,397 4,390,667 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 13,836,100 2,028,953 1,527,806 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 12,471,116 173,422 1,192,357 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 60,075,356 4,316,039 6,238,140 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 8,544,059 0 555,334 - ------------------------------------------------------------------------------------------------------------------------------------
196 THE PHOENIX EDGE SERIES FUND RESULTS OF SHAREHOLDER MEETING (CONTINUED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 105,190,729 3,756,537 8,467,389 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 80,731,916 3,992,006 4,927,982 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 98,932,590 3,159,353 4,674,625 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,444,079 434,020 98,030 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 27,249,409 1,396,918 2,345,708 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,100,048 150,310 447,933 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 36,962,260 1,868,454 2,898,101 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 81,026,393 2,940,526 3,777,425 - ------------------------------------------------------------------------------------------------------------------------------------
1H. Approve amendments to the fundamental investment restrictions of each Series and conforming changes to the Declaration of Trust as follows: A Series may not purchase or sell commodities or commodity contracts, except a Series may purchase and sell derivatives (including, but not limited to, options, futures contracts and options on futures contracts) whose value is tied to the value of a financial index or a financial instrument or other asset (including, but not limited to, securities indices, interest rates, securities, currencies and physical commodities).
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 96,251,456 1,833,220 5,286,825 - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 14,502,917 210,314 463,872 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,140,729 194,529 607,405 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 12,175,440 792,038 1,305,309 - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 18,509,250 355,076 1,417,487 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 283,167,201 14,051,587 17,781,285 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 48,018,266 2,369,230 3,127,910 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 12,096,560 79,423 1,699,149 - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 9,083,144 338,950 790,067 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 107,083,800 4,728,354 6,893,782 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 66,057,604 2,449,860 5,173,758 - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 40,114,487 1,436,213 3,051,060 - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 68,586,651 3,859,472 4,390,667 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 13,790,778 1,997,724 1,604,357 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 12,471,116 201,720 1,164,058 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 60,280,825 4,133,171 6,215,538 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 8,544,059 0 555,334 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 105,030,899 3,838,661 8,545,096 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 81,045,067 3,650,067 4,956,769 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 99,334,338 2,631,199 4,801,031 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,444,079 434,020 98,030 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 27,282,197 1,364,130 2,345,708 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,100,048 150,310 447,933 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 37,581,215 1,248,717 2,898,883 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 80,687,240 3,321,775 3,735,329 - ------------------------------------------------------------------------------------------------------------------------------------
197 THE PHOENIX EDGE SERIES FUND RESULTS OF SHAREHOLDER MEETING (CONTINUED) (UNAUDITED) 1I. Approve amendments to the fundamental investment restrictions of each Series and conforming changes to the Declaration of Trust as follows: It is proposed that there be no investment restrictions involving illiquid securities.
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 95,785,411 2,187,483 5,398,606 - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 14,502,917 210,314 463,872 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,140,729 194,529 607,405 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 12,300,780 724,337 1,247,671 - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 18,509,002 355,076 1,417,735 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 284,864,269 13,086,127 17,049,677 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 48,296,569 2,099,649 3,119,188 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 12,096,560 79,423 1,699,149 - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 9,083,144 338,950 790,067 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 105,867,483 4,460,236 8,378,217 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 66,640,779 1,866,684 5,173,758 - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 40,416,881 1,136,997 3,047,883 - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 69,344,929 3,075,805 4,416,056 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 13,675,491 2,129,646 1,587,722 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 12,470,833 173,705 1,192,357 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 60,202,147 4,187,834 6,239,554 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 8,544,059 0 555,334 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 105,520,639 3,600,542 8,293,475 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 81,432,295 3,313,422 4,906,186 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 99,239,766 2,688,451 4,838,351 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,444,079 434,020 98,030 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 27,381,925 1,257,615 2,352,495 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,101,235 149,124 447,933 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 37,666,862 1,162,571 2,899,382 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 81,146,391 2,717,539 3,880,415 - ------------------------------------------------------------------------------------------------------------------------------------
1J. Approve amendments to the fundamental investment restrictions of each Series and conforming changes to the Declaration of Trust as follows: It is proposed that there be no investment restrictions involving purchases on margin.
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 95,885,138 2,345,591 5,140,771 - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 14,509,347 203,884 463,872 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,140,729 194,529 607,405 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 12,119,303 962,573 1,190,912 - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 18,509,002 355,076 1,417,735 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 284,575,927 13,445,218 16,978,928 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 48,216,569 2,190,255 3,108,582 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 12,096,560 79,423 1,699,149 - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 9,083,144 338,950 790,067 - ------------------------------------------------------------------------------------------------------------------------------------
198 THE PHOENIX EDGE SERIES FUND RESULTS OF SHAREHOLDER MEETING (CONTINUED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 105,634,321 4,695,882 8,375,732 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 66,645,169 1,935,235 5,100,817 - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 40,162,927 1,434,620 3,004,213 - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 69,561,271 2,884,852 4,390,667 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 13,688,640 2,115,941 1,588,278 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 12,470,833 202,003 1,164,058 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 60,220,014 4,192,568 6,216,953 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 8,544,059 0 555,334 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 105,247,554 3,624,370 8,542,731 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 81,251,126 3,541,427 4,859,350 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 99,197,597 2,767,939 4,801,031 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,444,079 434,020 98,030 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 26,897,034 1,749,293 2,345,708 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,101,235 149,124 447,933 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 37,545,490 1,284,725 2,898,600 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 81,043,540 2,884,846 3,815,958 - ------------------------------------------------------------------------------------------------------------------------------------
1K. Approve amendments to the fundamental investment restrictions of each Series and conforming changes to the Declaration of Trust as follows: It is proposed that there be no investment restrictions involving investments for control.
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 96,096,203 2,056,283 5,219,015 - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 14,553,037 160,194 463,872 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,140,729 194,529 607,405 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 12,324,549 610,072 1,338,167 - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 18,509,002 355,076 1,417,735 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 284,956,394 12,843,848 17,199,830 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 48,338,985 2,054,786 3,121,635 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 12,096,560 79,423 1,699,149 - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 9,163,271 258,823 790,067 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 107,600,586 2,674,964 8,430,385 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 66,771,427 1,736,036 5,173,758 - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 40,425,474 1,121,593 3,054,694 - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 69,479,186 2,966,938 4,390,667 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 14,227,290 1,613,385 1,552,184 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 12,498,336 146,202 1,192,357 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 60,332,942 4,057,038 6,239,554 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 8,544,059 0 555,334 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 105,785,642 3,086,282 8,542,731 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 81,601,995 3,099,672 4,950,236 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 99,733,568 2,313,162 4,719,838 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,638,960 239,139 98,030 - ------------------------------------------------------------------------------------------------------------------------------------
199 THE PHOENIX EDGE SERIES FUND RESULTS OF SHAREHOLDER MEETING (CONTINUED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 27,253,002 1,042,612 2,696,421 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,101,235 149,124 447,933 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 37,669,208 1,160,225 2,899,382 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 81,415,967 2,550,952 3,777,425 - ------------------------------------------------------------------------------------------------------------------------------------
1L. Approve amendments to the fundamental investment restrictions of each Series and conforming changes to the Declaration of Trust as follows: It is proposed that there be no investment restrictions involving repurchase agreements.
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 96,188,785 1,962,910 5,219,806 - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 14,552,544 160,194 464,365 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,140,729 194,529 607,405 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 12,366,458 658,660 1,247,671 - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 18,509,002 355,076 1,417,735 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 286,026,392 11,509,317 17,464,364 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 48,470,085 1,928,617 3,116,704 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 12,096,560 79,423 1,699,149 - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 9,083,144 338,950 790,067 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 105,884,578 4,442,435 8,378,923 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 66,747,646 1,759,817 5,173,758 - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 40,450,249 1,103,628 3,047,883 - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 69,505,075 2,941,048 4,390,667 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 13,884,680 1,972,077 1,536,102 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 12,498,336 146,202 1,192,357 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 60,187,434 4,209,968 6,232,133 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 8,544,059 0 555,334 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 105,743,355 3,377,825 8,293,475 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 81,638,755 3,124,695 4,888,454 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 99,811,625 2,414,437 4,540,506 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,638,960 239,139 98,030 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 27,693,061 953,265 2,345,708 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,101,235 149,124 447,933 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 37,669,208 1,160,225 2,899,382 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 81,422,026 2,546,111 3,776,207 - ------------------------------------------------------------------------------------------------------------------------------------
1M. Approve amendments to the fundamental investment restrictions of each Series and conforming changes to the Declaration of Trust as follows: It is proposed that there be no investment restrictions involving investment company securities..
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 96,176,193 2,080,445 5,114,863 - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 14,546,606 166,625 463,872 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,140,729 194,529 607,405 - ------------------------------------------------------------------------------------------------------------------------------------
200 THE PHOENIX EDGE SERIES FUND RESULTS OF SHAREHOLDER MEETING (CONTINUED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 12,462,615 619,261 1,190,912 - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 18,509,002 355,076 1,417,735 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 286,208,576 11,420,466 17,371,031 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 48,460,743 1,937,540 3,117,123 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 12,096,560 79,423 1,699,149 - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 9,083,144 338,980 790,067 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 105,905,325 4,421,687 8,378,923 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 66,717,640 1,862,764 5,100,817 - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 40,482,219 1,115,329 3,004,213 - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 69,544,353 2,901,770 4,390,667 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 14,210,425 1,647,439 1,534,995 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 12,498,336 146,202 1,192,357 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 60,324,870 4,065,111 6,239,554 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 8,544,059 0 555,334 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 106,099,535 3,021,645 8,293,475 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 81,661,710 3,134,792 4,855,401 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 99,882,281 2,343,780 4,540,506 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,444,079 434,020 98,030 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 27,659,035 987,292 2,345,708 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,101,235 149,124 447,933 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 37,667,644 1,161,789 2,899,382 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 81,482,212 2,526,803 3,735,329 - ------------------------------------------------------------------------------------------------------------------------------------
2. Approve an amendment to the Fund's Declaration of Trust that would remove the provisions regarding fundamental investment restrictions from the Declaration of Trust.
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 98,103,101 1,490,068 3,778,332 - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 14,794,946 174,579 207,577 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,326,547 194,529 421,587 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 13,020,259 334,848 917,681 - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 18,969,681 133,935 1,178,197 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 294,262,211 7,799,771 12,938,091 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 50,069,610 1,053,141 2,392,655 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 12,510,133 311,087 1,053,912 - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 9,280,014 218,461 713,685 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 108,456,659 3,697,478 6,551,798 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 68,659,549 1,812,309 3,209,363 - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 41,689,412 1,106,646 1,805,703 - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 69,677,212 2,296,585 4,862,993 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 15,289,689 1,128,837 974,334 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 12,718,915 130,261 987,719 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 65,011,436 909,433 4,708,665 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 8,556,072 0 543,320 - ------------------------------------------------------------------------------------------------------------------------------------
201 THE PHOENIX EDGE SERIES FUND RESULTS OF SHAREHOLDER MEETING (CONTINUED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 108,197,586 2,655,670 6,561,400 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 84,119,391 2,520,590 3,011,923 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 101,585,186 1,852,602 3,328,779 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,638,960 239,139 98,030 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 29,038,212 785,658 1,168,165 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,224,092 92,512 381,687 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 39,064,403 679,951 1,984,462 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 83,067,384 1,723,903 2,953,057 - ------------------------------------------------------------------------------------------------------------------------------------
3. Approve the Fund's reliance on "manager of managers" relief under which the Fund's investment advisors, subject to the approval of the Board, may, among other things, appoint, replace or terminate subadvisors recommended by each Series' investment advisor or enter into or materially amend existing subadvisory agreements without shareholder approval.
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen International 98,056,077 1,531,558 3,783,865 - ------------------------------------------------------------------------------------------------------------------------------------ Aberdeen New Asia 14,950,484 96,656 129,963 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Dow 30 17,326,547 194,529 421,587 - ------------------------------------------------------------------------------------------------------------------------------------ Deutsche Nasdaq-100 Index(R) 13,019,759 364,032 888,997 - ------------------------------------------------------------------------------------------------------------------------------------ Duff & Phelps Real Estate 18,938,335 149,954 1,193,524 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Capital Growth 292,516,919 9,589,940 12,893,214 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Nifty Fifty 49,584,201 1,575,141 2,356,064 - ------------------------------------------------------------------------------------------------------------------------------------ Engemann Small & Mid-Cap Growth 12,744,531 76,689 1,053,912 - ------------------------------------------------------------------------------------------------------------------------------------ Federated U.S. Government Bond 9,348,675 149,800 713,685 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Money Market 111,506,330 1,930,763 5,268,842 - ------------------------------------------------------------------------------------------------------------------------------------ Goodwin Multi-Sector Fixed Income 68,663,358 1,808,500 3,209,363 - ------------------------------------------------------------------------------------------------------------------------------------ Hollister Value Equity 41,441,780 1,354,278 1,805,703 - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Research Enhanced Index 71,157,082 1,856,113 3,823,595 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 15,728,415 723,114 941,330 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Flexible Income 12,718,915 30,921 1,087,059 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Growth 65,528,677 397,716 4,703,141 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Focus Equity 8,556,072 0 543,320 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Balanced 108,713,581 2,593,527 6,107,547 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Growth and Income 84,554,114 2,253,276 2,844,513 - ------------------------------------------------------------------------------------------------------------------------------------ Oakhurst Strategic Allocation 101,762,982 1,812,969 3,190,617 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Global Value 7,638,960 239,139 98,030 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Mid-Cap Value 28,814,674 1,029,019 1,148,342 - ------------------------------------------------------------------------------------------------------------------------------------ Sanford Bernstein Small Cap Value 8,222,884 93,720 381,687 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Mid-Cap Growth 39,049,467 696,010 1,983,338 - ------------------------------------------------------------------------------------------------------------------------------------ Seneca Strategic Theme 82,823,472 1,975,576 2,945,296 - ------------------------------------------------------------------------------------------------------------------------------------
4. Approve the amendment of the investment objective of the Phoenix-Janus Equity Income Series to eliminate the income component of the investment objective
- ------------------------------------------------------------------------------------------------------------------------------------ FOR AGAINST ABSTAIN - ------------------------------------------------------------------------------------------------------------------------------------ Janus Equity Income 15,926,078 538,495 928,286 - ------------------------------------------------------------------------------------------------------------------------------------
202 FUND MANAGEMENT Information pertaining to the Trustees and officers* of the Trust is set forth below. The statement of additional information (SAI) includes additional information about the Trustees and is available without charge, upon request, by calling (800) 541-0171.
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN TERM OF OFFICE FUND COMPLEX OTHER TRUSTEESHIPS/ NAME, (DOB), ADDRESS AND AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS POSITION(S) WITH TRUST TIME SERVED DURING PAST 5 YEARS TRUSTEE HELD BY TRUSTEE ==================================================================================================================================== DISINTERESTED TRUSTEES ==================================================================================================================================== Frank M. Ellmer, CPA 1999 Retired 30 None 704 SW Lake Charles Circle Port St. Lucie, FL 34986 4/11/40 Trustee - ------------------------------------------------------------------------------------------------------------------------------------ John A. Fabian 1999 Retired 30 None 497 Hensler Lane Oradell, NJ 07649 2/5/34 Trustee - ------------------------------------------------------------------------------------------------------------------------------------ Roger A. Gelfenbien 2000 Retired 30 Chairman, Board of 37 Stonegate Drive Trustees at The Wethersfield, CT 06109 University of Connecticut 5/14/43 (1997-present). Director, Trustee USAllianz Variable Insurance Product Trust, 23 funds (1999-present). - ------------------------------------------------------------------------------------------------------------------------------------ Eunice S. Groark 1999 Self-employed 30 Director, Peoples' Bank 35 Saddle Ridge Drive (1995-present) Bloomfield, CT 06002 2/1/38 Trustee - ------------------------------------------------------------------------------------------------------------------------------------ Frank E. Grzelecki 2000 Retired; previously Managing Director, 30 Director, Trenwick Group, 312 Greenley Road Saugatuck Associates, Inc. (1999-2000); LTD (2000-present) and New Canaan, CT 06840 Vice Chairman, (1997-1998), President/ Barnes Group, Inc. 6/19/37 Chief Operating Officer (1992-1997), (1997-present). Trustee Handy & Harman - ------------------------------------------------------------------------------------------------------------------------------------ John R. Mallin 1999 Principal/Attorney, Cummings & Lockwood, 30 None Cummings & Lockwood LLC (1996-present) Cityplace I Hartford, CT 06103 7/28/50 Trustee - ------------------------------------------------------------------------------------------------------------------------------------ Timothy P. Shriver 1999 President and Chief Executive Officer, 30 None Special Olympics, Inc. Special Olympics, Inc. (1996-present) 1325 G Street, N.W. #500 Washington, D.C. 20005 8/29/59 Trustee ==================================================================================================================================== INTERESTED TRUSTEES ==================================================================================================================================== Simon Y. Tan 1999 Various positions, including Executive 30 Director, Phoenix- One American Row Vice President, Phoenix Life Insurance Aberdeen International Hartford, CT 06102 Company (1982-present) Advisors, LLC. Director 2/17/52 and President (1999- President/Trustee present) Phoenix Variable Advisors, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Dona D. Young 2000 Various positions, including President 30 Director, The Phoenix One American Row and Chief Operating Officer, Phoenix Companies, Inc. (2001- Hartford, CT 06102 Life Insurance Company (1980-present). present), Foot Locker, Inc. 1/8/54 (2001-present) (formerly Trustee known as Venator Group, Inc.), and Wachovia Corporation (2000-present). - ------------------------------------------------------------------------------------------------------------------------------------
203 FUND MANAGEMENT
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN TERM OF OFFICE FUND COMPLEX OTHER TRUSTEESHIPS/ NAME, (DOB), ADDRESS AND AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS POSITION(S) WITH TRUST TIME SERVED DURING PAST 5 YEARS TRUSTEE HELD BY TRUSTEE ==================================================================================================================================== OFFICER(S) WHO ARE NOT TRUSTEES ==================================================================================================================================== J. Roger Engemann 1998 Senior Vice President, Phoenix Edge N/A N/A 600 North Rosemead Blvd. Series Fund. President and Director Pasadena, CA 91107 Roger Engemann & Associates, Inc. 10/17/40 since 1969. President and Director, Senior Vice President Pasadena Capital Corporation (1988- present) and Roger Engemann Management Co., Inc. (1985-present). Chairman, President and Trustee (1986-present) Phoenix-Engemann Funds; Managing Director (1998-2001) Phoenix Investment Counsel, Inc; Senior Vice President (1998-present) Phoenix Series Fund; Senior Vice President (1998-2001) Phoenix Strategic Equity Series Fund. - ------------------------------------------------------------------------------------------------------------------------------------ Michael J. Gilotti 1999 Executive Vice President, Phoenix Edge N/A N/A One American Row Series Fund (1999-present), Senior Vice Hartford, CT 06102 President, Phoenix Life Insurance 05/25/47 Company (1999-present); Director Executive Vice President (2000-prsent), Phoenix Variable Advisors, Inc; Vice President and Bank and Broker/Dealer Markets, Aetna Retirement Services (1994-1999) - ------------------------------------------------------------------------------------------------------------------------------------ Michael E. Haylon 1993 Director and Executive Vice President, N/A N/A 56 Prospect Street Investment, Phoenix Investment Partners, Hartford, CT 06115 Ltd. (1995-present); Director (since 12/18/57 1994) and President (since 1995), Executive Vice President Phoenix Investment Counsel, Inc.; Director (since 1995), Phoenix Equity Planning Corp.; President (since June 2000) PXP Securities Corp.; Executive Vice President (since 1996); Duff & Phelps Investment Management Co.; Executive Vice President (since 1999) Phoenix/Zweig Advisors LLC and Euclid Advisors LLC. Director (1996-present) Phoenix-Aberdeen International Advisors, LLC.; Executive Vice President, Phoenix Funds (1993-present); Phoenix-Aberdeen Series Fund (1996-present) and Phoenix-Seneca Funds (2000-present). Executive Vice President (1997- present), Vice President (1996-1997), Phoenix- Duff & Phelps Institutional Mutual Funds. - ------------------------------------------------------------------------------------------------------------------------------------ Gail P. Seneca 1998 Senior Vice President, Phoenix Edge N/A N/A 909 Montgomery Street Series Fund. President and Chief San Francisco, CA 94133 Executive and Investment Officer, Seneca 03/07/53 Capital Management LLC (1996-present). Senior Vice President Managing Director, Equities, Phoenix Investment Counsel, Inc. (1998-present). President and Trustee (1996-present), Phoenix-Seneca Funds. Managing General Partner and Chief Executive and Investment Officer, GMG/Seneca Capital Management LP (1989-present). Senior Vice President, Phoenix Multi-Portfolio Fund (1998-present), Phoenix Duff & Phelps Institutional Mutual Funds (1999-present) and Phoenix Strategic Equity Series Fund (1998-present). General Partner, Genesis Merchant Group LP (1990-1996). President, GenCap, Inc. (1994-present). - ------------------------------------------------------------------------------------------------------------------------------------
204 FUND MANAGEMENT
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN TERM OF OFFICE FUND COMPLEX OTHER TRUSTEESHIPS/ NAME, (DOB), ADDRESS AND AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS POSITION(S) WITH TRUST TIME SERVED DURING PAST 5 YEARS TRUSTEE HELD BY TRUSTEE ==================================================================================================================================== OFFICER(S) WHO ARE NOT TRUSTEES ==================================================================================================================================== James D. Wehr 1991 Senior Vice President, Phoenix Edge N/A N/A 56 Prospect Street Series Fund, Senior Vice President, Hartford, CT 06115 Fixed Income (1998-present), Managing 05/17/57 Director (1996-1998), Fixed Income, Senior Vice President Vice President (1991-1996), Phoenix Investment Counsel, Inc. Senior Vice President (1997-present), Vice President (1988-1997), Phoenix Multi-Portfolio Fund; Senior Vice President (1997-present), Vice President (1990- 1997), Phoenix Series Fund; Senior Vice President (1997-present), Vice President (1993-1997) Phoenix-Goodwin California Tax Exempt Bond Fund and Senior Vice President (1997-present), Vice President (1996-1997), Phoenix Duff & Phelps Institutional Mutual Funds. Senior Vice President (1997-present), Phoenix-Goodwin Multi-Sector Fixed Income Fund, Phoenix-Goodwin Multi-Sector Short Term Bond Fund, Phoenix-Oakhurst Income & Growth Fund and Phoenix-Oakhurst Strategic Allocation Fund. Senior Vice President and Chief Investment Officer, Duff & Phelps Utilities Tax Free Income, Inc. (1997-present). Vice President (1996- present) Duff & Phelps Investment Manager Co. - ------------------------------------------------------------------------------------------------------------------------------------ Hugh Young 1996 Senior Vice President, Phoenix Edge N/A N/A Aberdeen Asset Managers LTD Series Fund. Senior Vice President, 88A Circular Road Phoenix-Aberdeen Series Fund (1996- Singapore 049439 present); Director, Phoenix-Aberdeen 05/21/58 International Advisors, LLC; Far East Senior Vice President Investment Director, Aberdeen Asset Management Asia Limited (1988-present); Managing Director, Aberdeen Asset Management Asia Limited (1992-present); Managing Director, Aberdeen Asset Management plc (1991-present); Managing Director, Aberdeen International Fund Managers Limited (2000-present); Director, Aberdeen Asset Management and Aberdeen Asset Managers (CI) Limited (2001 to present); Director, Abtrust Asian Smaller Companies Investment Trust plc (1995-present); Abtrust New Dawn Investment Trust plc (1989-present); Abtrust Emerging Asia Investment Trust Limited (1990-present); JF Philippine Fund Inc. and Apollo Tiger; President, Aberdeen Asia-Pacific Income Fund, Inc. (2001-present); Director and President, Aberdeen Australia Equity Fund, Inc. and Aberdeen Commonwealth Income Fund, Inc. (2001-present). - ------------------------------------------------------------------------------------------------------------------------------------ Nancy G. Curtiss 1994 Treasurer, Phoenix Edge Series Fund N/A N/A 56 Prospect Street (1994-present), Phoenix funds (1994- Hartford, CT 06115 present), Phoenix Duff & Phelps 11/24/52 Institutional Mutual Funds (1996-present), Treasurer Phoenix-Aberdeen Series Fund (1996- present) and Phoenix-Seneca Funds (2000-present). Vice President and Treasurer (1994-present), Phoenix Equity Planning Corporation. - ------------------------------------------------------------------------------------------------------------------------------------ Richard J. Wirth 2001 Vice President, Secretary and Counsel, N/A N/A One American Row Phoenix Edge Series Fund. Counsel, Hartford, CT 06102 Phoenix Life Insurance Company 11/14/58 (1993-present). Vice President, Secretary and Counsel - ------------------------------------------------------------------------------------------------------------------------------------ * The term "officer" means the president, vice president, secretary, treasurer, controller or any other officer who performs a policy making function.
205 THE PHOENIX EDGE SERIES FUND 101 Munson Street Greenfield, Massachusetts 01301 BOARD OF TRUSTEES Frank M. Ellmer, CPA John A. Fabian Roger A. Gelfenbien Eunice S. Groark Frank E. Grzelecki John R. Mallin Timothy P. Shriver Simon Y. Tan Dona D. Young EXECUTIVE OFFICERS Simon Y. Tan, President Michael E. Haylon, Executive Vice President Michael E. Gilotti, Executive Vice President J. Roger Engemann, Senior Vice President Gail P. Seneca, Senior Vice President James D. Wehr, Senior Vice President Hugh Young, Senior Vice President David L. Albrycht, Vice President Malcom Axon, Vice President Christian C. Bertelsen, Vice President Doreen A. Bonner, Vice President, Compliance Officer & Assistant Secretary Steven L. Colton, Vice President Timothy Devlin, Vice President Ronald K. Jacks, Vice President Richard D. Little, Vice President James E. Mair, Vice President Chester S. Sokolosky, Vice President Julie L. Sapia, Vice President Michael Schatt, Vice President John S. Tilson, Vice President Richard J. Wirth, Vice President, Secretary & Counsel Nancy G. Curtiss, Vice President & Treasurer INVESTMENT ADVISORS Phoenix Investment Counsel, Inc. 56 Prospect Street Hartford, Connecticut 06115-0480 Duff & Phelps Investment Management Co. 55 East Monroe Street, Suite 3600 Chicago, Illinois 60603 Phoenix-Aberdeen International Advisors, LLC One American Row Hartford, Connecticut 06102-5056 Phoenix Variable Advisors, Inc. One American Row Hartford, Connecticut 06102-5056 CUSTODIANS JP Morgan Chase Bank 270 Park Avenue New York, New York 10017-2076 Brown Brothers Harriman & Co. 40 Water Street Boston, Massachusetts 02109 State Street Bank and Trust Company 225 Franklin Street Boston, Massachusetts 002110 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP 160 Federal Street Boston, Massachusetts 02110 THIS PAGE LEFT INTENTIONALLY BLANK. THIS PAGE LEFT INTENTIONALLY BLANK. THIS PAGE LEFT INTENTIONALLY BLANK. -------------- PRSRT STD U.S. Postage P A I D Andrew Associates -------------- PHOENIX LIFE INSURANCE COMPANY P.O. Box 22012 Albany, NY 12201-2012 Phoenix Life Insurance Company www.phoenixwm.com GN0144A (C) Phoenix Life Insurance company 2-02 [RECYCLE LOGO OMITTED.] PRINTED ON RECYCLED PAPER SEMIANNUAL REPORT The Phoenix Edge SeriesFund JUNE 30, 2002 THIS PAGE INTENTIONALLY BLANK. TABLE OF CONTENTS PAGE ---- Phoenix-Aberdeen International Series ....................................... 2 Phoenix-Aberdeen New Asia Series ............................................ 7 Phoenix-AIM Mid-Cap Equity Series ........................................... 11 Phoenix-Alliance/Bernstein Growth + Value Series ............................ 15 Phoenix-Deutsche Dow 30 Series .............................................. 19 Phoenix-Deutsche Nasdaq-100 Index(R)Series .................................. 22 Phoenix-Duff & Phelps Real Estate Securities Series ......................... 26 Phoenix-Engemann Capital Growth Series ...................................... 29 Phoenix-Engemann Small & Mid-Cap Growth Series .............................. 32 Phoenix-Federated U.S. Government Bond Series ............................... 36 Phoenix-Goodwin Money Market Series ......................................... 39 Phoenix-Goodwin Multi-Sector Fixed Income Series ............................ 43 Phoenix-Hollister Value Equity Series ....................................... 49 Phoenix-J.P. Morgan Research Enhanced Index Series .......................... 53 Phoenix-Janus Flexible Income Series ........................................ 60 Phoenix-Janus Growth Series ................................................. 65 Phoenix-MFS Investors Growth Stock Series ................................... 69 Phoenix-MFS Investors Trust Series .......................................... 73 Phoenix-MFS Value Series .................................................... 78 Phoenix-Oakhurst Growth and Income Series ................................... 82 Phoenix-Oakhurst Strategic Allocation Series ................................ 87 Phoenix-Sanford Bernstein Global Value Series ............................... 94 Phoenix-Sanford Bernstein Mid-Cap Value Series ..............................100 Phoenix-Sanford Bernstein Small-Cap Value Series ............................104 Phoenix-Seneca Mid-Cap Growth Series ........................................108 Phoenix-Seneca Strategic Theme Series .......................................111 Phoenix-Van Kampen Focus Equity Series ......................................114 Notes to Financial Statements ...............................................117 |------------------------------------------------------------------------------| | Not FDIC Insured | No Bank Guarantee | May Lose Value | |------------------------------------------------------------------------------| PHOENIX-ABERDEEN INTERNATIONAL SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE --------- ------------ FOREIGN COMMON STOCKS--97.5% AUSTRALIA--1.5% QBE Insurance Group Ltd. (Property & Casualty Insurance) ............................................ 594,600 $ 2,216,390 ------------ BRAZIL--2.3% Companhia Paranaense de Energia-Copel ADR (Electric Utilities) .................................. 120,000 486,000 Companhia Vale do Rio Doce ADR (Diversified Metals & Mining) (b) ......................................... 10,200 282,234 Petroleo Brasileiro SA ADR (Integrated Oil & Gas) ....... 35,000 609,000 Tele Norte Leste Participacoes SA ADR (Integrated Telecommunication Services) ........................... 100,000 995,000 Unibanco GDR (Banks) .................................... 65,250 1,076,625 ------------ 3,448,859 ------------ DENMARK--2.2% Danske Bank A/S (Banks) ................................. 176,000 3,240,765 ------------ FINLAND--2.4% Nokia Oyj (Telecommunications Equipment) ................ 165,000 2,415,039 Stora Enso Oyj (Paper Products) ......................... 87,850 1,231,165 ------------ 3,646,204 ------------ FRANCE--10.3% Assurances Generales de France (Multi-line Insurance) ............................................ 31,059 1,426,985 Aventis SA (Pharmaceuticals) ............................ 33,887 2,401,304 Cap Gemini SA (IT Consulting & Services) ................ 9,310 370,090 Havas Advertising SA (Advertising) ...................... 193,810 1,192,494 L'Oreal SA (Household Products) ......................... 32,100 2,504,518 Pechiney SA Class A (Metal & Glass Containers) .......... 34,580 1,579,533 Schneider Electric SA (Electrical Components & Equipment) ............................................ 33,090 1,779,454 TotalFinaElf SA (Oil & Gas Refining, Marketing & Transportation) ....................................... 13,710 2,226,032 Valeo SA (Auto Parts & Equipment) ....................... 46,000 1,912,635 ------------ 15,393,045 ------------ GERMANY--3.1% Allianz AG (Multi-line Insurance) ....................... 7,800 1,562,265 BASF AG (Diversified Chemicals) ......................... 38,800 1,799,117 Bayerische Motoren Werke AG (Automobile Manufacturers) ........................................ 32,140 1,325,240 ------------ 4,686,622 ------------ HONG KONG--3.2% Giordano International Ltd. (Apparel Retail) ............ 4,790,000 2,947,802 Swire Pacific Ltd. Class B (Multi-Sector Holdings) ...... 2,410,000 1,776,668 ------------ 4,724,470 ------------ INDIA--0.2% Videsh Sanchar Nigam Ltd. ADR (Integrated Telecommunication Services) ........................... 35,598 217,148 ------------ ITALY--7.1% ENI SpA (Integrated Oil & Gas) .......................... 218,296 3,471,073 Mediaset SpA (Broadcasting & Cable TV) .................. 193,000 1,494,395 Sanpaolo IMI SpA (Banks) ................................ 213,800 2,145,327 Telecom Italia Mobile SpA (Wireless Telecommunication Services) ........................... 310,000 1,270,580 Telecom Italia SpA (Integrated Telecommunication Services) ............................................. 279,000 2,185,091 ------------ 10,566,466 ------------ SHARES VALUE --------- ------------ JAPAN--20.6% Fuji Photo Film Co. Ltd. (Leisure Products) ............. 70,000 $ 2,260,211 Fujikura Ltd. (Electrical Components & Equipment) ....... 482,000 1,757,391 Honda Motor Co. Ltd. (Automobile Manufacturers) ......... 58,800 2,384,260 Kao Corp. (Household Products) .......................... 110,000 2,533,038 Mabuchi Motor Co. Ltd. (Electrical Components & Equipment) ............................................ 29,000 2,857,511 NTT DoCoMo, Inc. (Wireless Telecommunication Services) ............................................. 850 2,092,093 Olympus Optical Co. Ltd. (Health Care Equipment) ........ 154,000 2,150,880 Orix Corp. (Consumer Finance) ........................... 25,100 2,025,071 Rohm Co. Ltd. (Semiconductors) .......................... 13,000 1,940,411 Shin-Etsu Chemical Co. Ltd. (Specialty Chemicals) ....... 71,000 3,050,743 Terumo Corp. (Health Care Equipment) .................... 158,800 2,122,526 Uni-Charm Corp. (Household Products) .................... 85,000 3,191,328 Yamanouchi Pharmaceutical Co. Ltd. (Pharmaceuticals) ..................................... 90,000 2,335,301 ------------ 30,700,764 ------------ LUXEMBOURG--1.2% Arcelor (Steel) (b) ..................................... 127,333 1,807,132 ------------ NETHERLANDS--7.2% Buhrmann NV (Distributors) .............................. 118,190 1,090,234 DSM NV (Specialty Chemicals) ............................ 36,660 1,701,336 IHC Caland NV (Oil & Gas Equipment & Services) .......... 29,918 1,789,117 ING Groep NV (Diversified Financial Services) ........... 51,320 1,317,808 Koninklijke (Royal) Philips Electronics NV (Industrial Conglomerates) ........................................ 84,830 2,368,467 TPG NV (Air Freight & Couriers) ......................... 112,130 2,532,679 ------------ 10,799,641 ------------ SINGAPORE--2.2% Oversea-Chinese Banking Corp. Ltd. (Banks) .............. 493,000 3,264,882 ------------ SOUTH KOREA--1.9% Kookmin Bank ADR (Banks) ................................ 57,600 2,831,040 ------------ SPAIN--1.8% Union Fenosa SA (Electric Utilities) .................... 147,547 2,710,413 ------------ SWEDEN--4.0% Assa Abloy AB Class B (Industrial Machinery) ............ 139,511 1,965,867 Skandia Forsakrings AB (Life & Health Insurance) ........ 253,210 1,151,684 Svenska Handelsbanken AB Class A (Banks) .............. 104,500 1,597,602 Volvo AB Class B (Construction, Farm Machinery & Heavy Trucks) ......................................... 61,100 1,266,520 ------------ 5,981,673 ------------ SWITZERLAND--8.3% Adecco SA Registered Shares (Employment Services) ............................................. 31,170 1,851,580 Credit Suisse Group (Banks) ............................. 66,120 2,099,365 Nestle SA Registered Shares Class B (Packaged Foods and Meats) ...................................... 11,350 2,646,541 Swiss Re Registered Shares (Property & Casualty Insurance) ............................................ 29,590 2,893,085 UBS AG Registered Shares (Diversified Financial Services) (b) ......................................... 31,300 1,574,307 Zurich Financial Services AG (Multi-line Insurance) ..... 6,400 1,292,343 ------------ 12,357,221 ------------
See Notes to Financial Statements 2 PHOENIX-ABERDEEN INTERNATIONAL SERIES
SHARES VALUE --------- ------------ UNITED KINGDOM--18.0% 3i Group plc (Diversified Financial Services) ........... 122,000 $ 1,272,945 BOC Group plc (Specialty Chemicals) ..................... 75,000 1,164,962 BP plc (Integrated Oil & Gas) ........................... 400,000 3,359,602 BT Group plc (Integrated Telecommunication Services) ............................................. 505,500 1,941,771 Carlton Communications plc (Movies & Entertainment) ........................................ 200,000 640,215 Compass Group plc (Food Distributors) ................... 140,000 849,351 FirstGroup plc (Highways & Railtracks) .................. 246,000 944,957 GlaxoSmithKline plc (Pharmaceuticals) ................... 174,200 3,765,309 HSBC Holdings plc (Banks) ............................... 290,000 3,335,290 Lloyds TSB Group plc (Diversified Financial Services) ............................................. 140,000 1,393,534 mm02 plc (Wireless Telecommunication Services) (b) ...... 300,000 192,064 Prudential plc (Life & Health Insurance) ................ 201,100 1,839,245 Reuters Group plc (Diversified Commercial Services) ..... 135,000 716,126 Royal Bank of Scotland Group plc (Banks) ................ 70,000 1,984,665 Shire Pharmaceuticals Group plc (Pharmaceuticals) (b) ................................. 166,500 1,472,036 Vodafone Group plc (Wireless Telecommunication Services) ........................... 1,500,000 2,057,833 ------------ 26,929,905 ------------ TOTAL FOREIGN COMMON STOCKS (Identified cost $166,536,855) ..................................... 145,522,640 ------------ FOREIGN PREFERRED STOCKS--1.7% SOUTH KOREA--1.7% Samsung Electronics Co. Ltd. Pfd. (Semiconductors) ...................................... 19,000 2,574,481 ------------ TOTAL FOREIGN PREFERRED STOCKS (Identified cost $1,097,464) ....................................... 2,574,481 ------------ TOTAL LONG TERM INVESTMENTS--99.2% (Identified cost $167,634,319) ..................................... 148,097,121 ------------ STANDARD PAR & POOR'S VALUE RATING (000) --------- ------ SHORT-TERM OBLIGATIONS--3.1% COMMERCIAL PAPER--3.1% Special Purpose Accounts Receivable Cooperative Corp. 2%, 7/1/02.................... A-1 $4,590 4,590,000 ------------ TOTAL SHORT-TERM OBLIGATIONS (Identified cost $4,590,000)........................................ 4,590,000 ------------ TOTAL INVESTMENTS--102.3% (Identified Cost $172,224,319)...................................... 152,687,121(a) Other assets and liabilities, net--(2.3)%........................... (3,407,568) ------------ NET ASSETS--100.0%.................................................... $149,279,553 ============ (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $10,230,643 and gross depreciation of $30,881,735 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $173,338,213. (b) Non-income producing.
See Notes to Financial Statements 3 PHOENIX-ABERDEEN INTERNATIONAL SERIES INDUSTRY DIVERSIFICATION AS A PERCENTAGE OF TOTAL VALUE OF TOTAL LONG-TERM INVESTMENTS (UNAUDITED) Advertising ........................................................... 0.8% Air Freight & Couriers ................................................ 1.7 Apparel Retail ........................................................ 2.0 Auto Parts & Equipment ................................................ 1.3 Automobile Manufacturers .............................................. 2.5 Banks ................................................................. 14.6 Broadcasting & Cable TV ............................................... 1.0 Construction, Farm Machinery & Heavy Trucks ........................... 0.9 Consumer Finance ...................................................... 1.4 Distributors .......................................................... 0.7 Diversified Chemicals ................................................. 1.2 Diversified Commercial Services ....................................... 0.5 Diversified Financial Services ........................................ 3.8 Diversified Metals & Mining ........................................... 0.2 Electric Utilities .................................................... 2.2 Electrical Components & Equipment ..................................... 4.3 Employment Services ................................................... 1.3 Food Distributors ..................................................... 0.6 Health Care Equipment ................................................. 2.9 Highways & Railtracks ................................................. 0.6 Household Products .................................................... 5.6 IT Consulting & Services .............................................. 0.2 Industrial Conglomerates .............................................. 1.6 Industrial Machinery .................................................. 1.3 Integrated Oil & Gas .................................................. 5.0 Integrated Telecommunication Services ................................. 3.6 Leisure Products ...................................................... 1.5 Life & Health Insurance ............................................... 2.0 Metal & Glass Containers .............................................. 1.1 Movies & Entertainment ................................................ 0.4 Multi-Sector Holdings ................................................. 1.2 Multi-line Insurance .................................................. 2.9 Oil & Gas Equipment & Services ........................................ 1.2 Oil & Gas Refining, Marketing & Transportation ........................ 1.5 Packaged Foods and Meats .............................................. 1.8 Paper Products ........................................................ 0.8 Pharmaceuticals ....................................................... 6.7 Property & Casualty Insurance ......................................... 3.5 Semiconductors ........................................................ 3.0 Specialty Chemicals ................................................... 4.0 Steel ................................................................. 1.2 Telecommunications Equipment .......................................... 1.6 Wireless Telecommunication Services ................................... 3.8 ----- 100.0% ===== See Notes to Financial Statements 4 PHOENIX-ABERDEEN INTERNATIONAL SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $172,224,319) ...................... $152,687,121 Cash ............................................................................... 1,913 Receivables Dividends and interest ........................................................... 288,531 Tax reclaim ...................................................................... 263,310 Fund shares sold ................................................................. 39,891 ------------ Total assets ................................................................... 153,280,766 ------------ LIABILITIES Payables Fund shares repurchased .......................................................... 3,728,561 Printing fee ..................................................................... 110,720 Investment advisory fee .......................................................... 91,942 Financial agent fee .............................................................. 14,334 Trustees' fee .................................................................... 3,717 Accrued expenses ................................................................... 51,939 ------------ Total liabilities .............................................................. 4,001,213 ------------ NET ASSETS ......................................................................... $149,279,553 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $203,509,122 Undistributed net investment income .............................................. 805,184 Accumulated net realized loss .................................................... (35,527,688) Net unrealized depreciation ...................................................... (19,507,065) ------------ NET ASSETS ......................................................................... $149,279,553 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 15,230,266 ============ Net asset value and offering price per share ....................................... $9.80 =====
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ................................................................................................ $ 2,420,286 Interest ................................................................................................. 26,853 Foreign taxes withheld ................................................................................... (234,064) ----------- Total investment income ................................................................................ 2,213,075 ----------- EXPENSES Investment advisory fee .................................................................................. 581,046 Financial agent fee ...................................................................................... 84,304 Custodian ................................................................................................ 68,515 Printing ................................................................................................. 35,511 Professional ............................................................................................. 14,606 Trustees ................................................................................................. 3,455 Miscellaneous ............................................................................................ 8,646 ----------- Total expenses ......................................................................................... 796,083 ----------- NET INVESTMENT INCOME ...................................................................................... 1,416,992 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .......................................................................... (3,019,892) Net realized gain on foreign currency transactions ....................................................... 14,612 Net change in unrealized appreciation (depreciation) on investments ...................................... 2,919,968 Net change in unrealized appreciation (depreciation) on foreign currency and foreign currency transactions 31,441 ----------- NET LOSS ON INVESTMENTS .................................................................................... (53,871) ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....................................................... $ 1,363,121 ===========
See Notes to Financial Statements 5 PHOENIX-ABERDEEN INTERNATIONAL SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ------------- ------------- FROM OPERATIONS Net investment income (loss) ......................................................... $ 1,416,992 $ 1,348,425 Net realized gain (loss) ............................................................. (3,005,280) (32,633,883) Net change in unrealized appreciation (depreciation) ................................. 2,951,409 (23,424,568) ------------- ------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .......................... 1,363,121 (54,710,026) ------------- ------------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ................................................................ (612,286) -- Net realized short-term gains ........................................................ -- (2,072,805) Net realized long-term gains ......................................................... -- (3,087,812) ------------- ------------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ............................ (612,286) (5,160,617) ------------- ------------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (6,612,283 and 15,133,649 shares, respectively) ........ 64,375,197 163,527,768 Net asset value of shares issued from reinvestment of distributions (64,498 and 492,572 shares, respectively) .................................................. 612,286 5,160,617 Cost of shares repurchased (7,825,508 and 16,881,045 shares, respectively) ........... (76,682,842) (182,202,911) ------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ............................ (11,695,359) (13,514,526) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS ................................................ (10,944,524) (73,385,169) NET ASSETS Beginning of period .................................................................. 160,224,077 233,609,246 ------------- ------------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $805,184 AND $478, RESPECTIVELY) ...................................................................... $ 149,279,553 $ 160,224,077 ============= =============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, 6/30/02 ----------------------------------------------- (UNAUDITED) 2001 2000 1999 1998 1997 ----------- ------ ------ ------ ------ ------ Net asset value, beginning of period ............... $ 9.78 $13.25 $17.19 $15.46 $14.53 $14.52 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ..................... 0.09 0.06 0.08 0.23 0.12(1) 0.12(1) Net realized and unrealized gain (loss) .......... (0.03) (3.23) (2.77) 4.13 3.94 1.61 ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ............... 0.06 (3.17) (2.69) 4.36 4.06 1.73 ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ............. (0.04) -- (0.06) (0.39) -- (0.22) Distributions from net realized gains ............ -- (0.30) (1.19) (2.24) (3.13) (1.50) ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS ............................ (0.04) (0.30) (1.25) (2.63) (3.13) (1.72) ------ ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE .......................... 0.02 (3.47) (3.94) 1.73 0.93 0.01 ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ..................... $ 9.80 $ 9.78 $13.25 $17.19 $15.46 $14.53 ====== ====== ====== ====== ====== ====== Total return ....................................... 0.62%(3) (24.04)% (15.81)% 29.49% 27.92% 12.04% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ............ $149,280 $160,224 $233,609 $298,973 $241,915 $194,108 RATIO TO AVERAGE NET ASSETS OF: Operating expenses ............................... 1.03%(2) 1.02% 1.02% 1.01% 0.98% 1.01% Net investment income ............................ 1.83%(2) 0.72% 0.54% 0.81% 0.72% 0.72% Portfolio turnover ................................. 16%(3) 74% 94% 79% 93% 184% (1) Computed using average shares outstanding. (2) Annualized. (3) Not annualized.
See Notes to Financial Statements 6 PHOENIX-ABERDEEN NEW ASIA SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE --------- ----------- FOREIGN COMMON STOCKS--90.5% AUSTRALIA--9.2% BRL Hardy Ltd. (Brewers) ................................ 70,000 $ 354,059 Leighton Holdings Ltd. (Construction & Engineering) ..... 55,916 326,141 QBE Insurance Group Ltd. (Property & Casualty Insurance) ............................................ 117,261 437,094 Rio Tinto Ltd. (Diversified Metals & Mining) ............ 18,000 338,711 ----------- 1,456,005 ----------- CHINA--4.9% PetroChina Co. Ltd. (Integrated Oil & Gas) .............. 1,750,000 372,450 Zhejiang Expressway Co. Ltd. (Highways & Railtracks) ........................................... 1,200,000 407,707 ----------- 780,157 ----------- HONG KONG--16.1% China Mobile (Hong Kong) Ltd. (Wireless Telecommunication Services) (b) ....................... 125,000 370,206 Dah Sing Financial Group (Banks) ........................ 63,000 306,935 Giordano International Ltd. (Apparel Retail) ............ 838,000 515,712 Hong Kong Exchanges & Clearing Ltd. (Diversified Financial Services) ................................... 166,000 273,485 MTR Corp. Ltd. (Railroads) .............................. 170,000 220,136 Swire Pacific Ltd. Class B (Multi-Sector Holdings) ...... 780,000 575,021 Wing Hang Bank Ltd. (Banks) ............................. 90,000 298,280 ----------- 2,559,775 ----------- INDIA--6.3% Bharat Petroleum Corp. Ltd. (Oil & Gas Refining, Marketing & Transportation) ........................... 72,000 393,537 Gas Authority of India Ltd. GDR (Gas Utilities) ......... 35,000 319,375 ICICI Bank Ltd. (Diversified Financial Services) ........ 87,750 246,771 Videsh Sanchar Nigam Ltd. ADR (Integrated Telecommunication Services) ........................... 7,542 46,006 ----------- 1,005,689 ----------- INDONESIA--3.3% PT Unilever Indonesia Tbk (Household Products) .......... 218,000 517,933 ----------- MALAYSIA--6.3% Malaysian Oxygen Berhad (Specialty Chemicals) ........... 150,000 394,747 Public Bank Berhad (Banks) .............................. 350,000 318,693 Sime UEP Properties Berhad (Homebuilding) ............... 250,000 289,481 ----------- 1,002,921 ----------- PHILIPPINES--2.9% Ayala Land, Inc. (Real Estate Management & Development) .......................................... 2,250,000 250,381 Bank of the Philippine Islands (Banks) .................. 220,500 210,320 ----------- 460,701 ----------- SINGAPORE--13.0% City Developments Ltd. (Real Estate Management & Development) .......................................... 100,000 322,633 Oversea-Chinese Banking Corp. Ltd. (Banks) .............. 69,000 456,951 Robinson & Co., Ltd. (Department Stores) ................ 125,000 382,066 Singapore Airlines Ltd. (Airlines) ...................... 45,000 328,577 United Overseas Bank Ltd. (Banks) ....................... 78,400 563,579 ----------- 2,053,806 ----------- SHARES VALUE --------- ----------- SOUTH KOREA--11.3% Hyundai Motor Co. Ltd. (Automobile Manufacturers) ....... 22,000 $ 241,404 Kookmin Bank (Banks) .................................... 15,000 728,203 KT Corp. (Integrated Telecommunication Services) ........ 12,000 481,811 POSCO (Steel) ........................................... 3,000 332,929 ----------- 1,784,347 ----------- SRI LANKA--1.8% Keells (John) Holdings Ltd. (Packaged Foods and Meats) ................................................ 200,000 132,117 National Development Bank Ltd. (Banks) .................. 150,000 138,879 NDB Ltd. (Banks) ........................................ 196,500 20,442 ----------- 291,438 ----------- TAIWAN--7.5% Fubon Financial Holding Co. Ltd. (Semiconductors) ....... 370,000 369,901 SinoPac Holdings Co. (Diversified Financial Services) (b) ......................................... 978,611 427,662 Standard Foods Taiwan Ltd. GDR (Packaged Foods and Meats) ............................................ 52,447 72,115 Taiwan Cellular Corp. (Wireless Telecommunication Services) ............................................. 250,000 319,526 ----------- 1,189,204 ----------- THAILAND--5.9% Hana Microelectronics Public Co., Ltd. (Electronic Equipment & Instruments) .............................. 180,800 306,930 Phatra Insurance Public Co., Ltd. (Property & Casualty Insurance) ............................................ 71,600 246,548 PTT Exploration and Production Public Co. Ltd. (Oil & Gas Exploration & Production) ......................... 135,000 380,340 ----------- 933,818 ----------- UNITED KINGDOM--2.0% Rowe Evans Investments Group plc (Agricultural Products) ............................................. 200,000 321,632 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $13,780,045) ...................................... 14,357,426 ----------- FOREIGN PREFERRED STOCKS--4.9% SOUTH KOREA--4.9% Samsung Electronics Co. Ltd. Pfd. (Semiconductors) ...... 5,750 779,119 ----------- TOTAL FOREIGN PREFERRED STOCKS (Identified cost $453,424) ......................................... 779,119 ----------- TOTAL LONG TERM INVESTMENTS--95.4% (Identified cost $14,233,469) ...................................... 15,136,545 ----------- STANDARD PAR & POOR'S VALUE RATING (000) ---------- ------- SHORT-TERM OBLIGATIONS--5.5% COMMERCIAL PAPER--5.5% Receivables Capital Corp. 1.90%, 7/1/02 .... A-1+ $ 620 620,000 Ciesco LP 1.90%, 7/2/02 .................... A-1+ 250 249,987 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $869,987) ......................................... 869,987 ----------- TOTAL INVESTMENTS--100.9% (Identified Cost $15,103,456) ...................................... 16,006,532(a) Other assets and liabilities, net--(0.9)% .......................... (136,718) ----------- NET ASSETS--100.0% ................................................... $15,869,814 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $2,376,774 and gross depreciation of $1,619,511 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $15,249,269. (b) Non-income producing.
See Notes to Financial Statements 7 PHOENIX-ABERDEEN NEW ASIA SERIES INDUSTRY DIVERSIFICATION AS A PERCENTAGE OF TOTAL VALUE OF TOTAL LONG-TERM INVESTMENTS (UNAUDITED) Agricultural Products ................................................. 2.1% Airlines .............................................................. 2.2 Apparel Retail ........................................................ 3.4 Automobile Manufacturers .............................................. 1.6 Banks ................................................................. 20.1 Brewers ............................................................... 2.3 Construction & Engineering ............................................ 2.2 Department Stores ..................................................... 2.5 Diversified Financial Services ........................................ 6.3 Diversified Metals & Mining ........................................... 2.2 Electronic Equipment & Instruments .................................... 2.0 Gas Utilities ......................................................... 2.1 Highways & Railtracks ................................................. 2.7 Homebuilding .......................................................... 1.9 Household Products .................................................... 3.4 Integrated Oil & Gas .................................................. 2.5 Integrated Telecommunication Services ................................. 3.5 Multi-Sector Holdings ................................................. 3.8 Oil & Gas Exploration & Production .................................... 2.5 Oil & Gas Refining, Marketing & Transportation ........................ 2.6 Packaged Foods and Meats .............................................. 1.3 Property & Casualty Insurance ......................................... 4.5 Railroads ............................................................. 1.5 Real Estate Management & Development .................................. 3.8 Semiconductors ........................................................ 7.6 Specialty Chemicals ................................................... 2.6 Steel ................................................................. 2.2 Wireless Telecommunication Services ................................... 4.6 ----- 100.0% ===== See Notes to Financial Statements 8 PHOENIX-ABERDEEN NEW ASIA SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $15,103,456) ....................... $16,006,532 Cash ............................................................................... 2,927 Foreign currency at value (Identified cost $22,436) ................................ 23,107 Receivables Dividends and interest ........................................................... 36,216 Fund shares sold ................................................................. 9,854 ----------- Total assets ................................................................... 16,078,636 ----------- LIABILITIES Payables Fund shares repurchased .......................................................... 145,857 Printing fee ..................................................................... 21,331 Professional fee ................................................................. 16,260 Financial agent fee .............................................................. 4,468 Trustees' fee .................................................................... 3,717 Investment advisory fee .......................................................... 559 Accrued expenses ................................................................... 16,630 ----------- Total liabilities .............................................................. 208,822 ----------- NET ASSETS ......................................................................... $15,869,814 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $17,263,152 Undistributed net investment income .............................................. 202,155 Accumulated net realized loss .................................................... (2,500,296) Net unrealized appreciation ...................................................... 904,803 ----------- NET ASSETS ......................................................................... $15,869,814 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 1,872,647 =========== Net asset value and offering price per share ....................................... $8.47 =====
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ................................................................................................ $ 336,978 Interest ................................................................................................. 4,942 Foreign taxes withheld ................................................................................... (14,114) ---------- Total investment income ................................................................................ 327,806 ---------- EXPENSES Investment advisory fee .................................................................................. 73,358 Financial agent fee ...................................................................................... 26,101 Custodian ................................................................................................ 41,432 Professional ............................................................................................. 14,205 Printing ................................................................................................. 6,993 Trustees ................................................................................................. 3,455 Miscellaneous ............................................................................................ 3,219 ---------- Total expenses ......................................................................................... 168,763 Less expenses borne by investment adviser .............................................................. (72,050) ---------- Net expenses ........................................................................................... 96,713 ---------- NET INVESTMENT INCOME ...................................................................................... 231,093 ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .......................................................................... (187,268) Net realized loss on foreign currency transactions ....................................................... (5,257) Net change in unrealized appreciation (depreciation) on investments ...................................... 2,023,340 Net change in unrealized appreciation (depreciation) on foreign currency and foreign currency transactions 275 ---------- NET GAIN ON INVESTMENTS .................................................................................... 1,831,090 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....................................................... $2,062,183 ==========
See Notes to Financial Statements 9 PHOENIX-ABERDEEN NEW ASIA SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ----------- ----------- FROM OPERATIONS Net investment income (loss) ................................................................... $ 231,093 $ 312,722 Net realized gain (loss) ....................................................................... (192,525) (999,075) Net change in unrealized appreciation (depreciation) ........................................... 2,023,615 855,407 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................................... 2,062,183 169,054 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income .......................................................................... (149,577) (289,069) ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ...................................... (149,577) (289,069) ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (1,484,532 and 2,340,672 shares, respectively) ................... 12,569,929 16,679,198 Net asset value of shares issued from reinvestment of distributions (17,875 and 40,074 shares, respectively) ................................................................................ 149,577 289,069 Cost of shares repurchased (1,472,324 and 2,344,849 shares, respectively) ...................... (12,337,464) (16,761,270) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ...................................... 382,042 206,997 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS .......................................................... 2,294,648 86,982 NET ASSETS Beginning of period ............................................................................ 13,575,166 13,488,184 ----------- ----------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $202,155 AND $120,639, RESPECTIVELY) ................................................................................ $15,869,814 $13,575,166 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, 6/30/02 ----------------------------------------------- (UNAUDITED) 2001 2000 1999 1998 1997 ----------- ------ ------ ------ ------ ------ Net asset value, beginning of period ............... $ 7.37 $ 7.47 $ 9.16 $ 6.13 $ 6.44 $ 9.96 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ..................... 0.12 0.19 0.22 0.11(2) 0.13(2) 0.15 Net realized and unrealized gain (loss) .......... 1.06 (0.12) (1.67) 3.00 (0.41) (3.36) ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ............... 1.18 0.07 (1.45) 3.11 (0.28) (3.21) ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ............. (0.08) (0.17) (0.24) (0.08) (0.03) (0.25) Distributions from net realized gains ............ -- -- -- -- -- (0.01) Tax return of capital ............................ -- -- -- -- -- (0.05) ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS ............................ (0.08) (0.17) (0.24) (0.08) (0.03) (0.31) ------ ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE .......................... 1.10 (0.10) (1.69) 3.03 (0.31) (3.52) ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ..................... $ 8.47 $ 7.37 $ 7.47 $ 9.16 $ 6.13 $ 6.44 ====== ====== ====== ====== ====== ====== Total return ....................................... 16.13%(4) 1.02% (15.96)% 50.96% (4.44)% (32.39)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ............ $15,870 $13,575 $13,488 $17,838 $9,510 $10,017 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) ............................ 1.32%(3) 1.25% 1.25% 1.25% 1.25% 1.25% Net investment income ............................ 3.15%(3) 2.44% 2.42% 1.49% 2.09% 1.63% Portfolio turnover ................................. 10%(4) 46% 60% 35% 46% 27% (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 2.30%, 2.41%, 2.41%, 2.39%, 2.50% and 2.00% for the periods ended June 30, 2002, December 31, 2001, 2000, 1999, 1998 and 1997, respectively. (2) Computed using average shares outstanding. (3) Annualized. (4) Not annualized.
See Notes to Financial Statements 10 PHOENIX-AIM MID-CAP EQUITY SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE ------ ---------- COMMON STOCKS--82.0% ADVERTISING--1.3% Omnicom Group, Inc. .................................. 1,600 $ 73,280 ---------- AEROSPACE & DEFENSE--3.0% Northrop Grumman Corp. ............................... 600 75,000 Raytheon Co. ......................................... 2,300 93,725 ---------- 168,725 ---------- APPLICATION SOFTWARE--1.3% Mentor Graphics Corp. (b) ............................ 2,200 31,284 PeopleSoft, Inc. (b) ................................. 2,800 41,664 ---------- 72,948 ---------- AUTO PARTS & EQUIPMENT--1.0% Gentex Corp. (b) ..................................... 2,000 54,940 ---------- BANKS--1.3% Marshall & Ilsley Corp. .............................. 1,200 37,116 TCF Financial Corp. .................................. 700 34,370 ---------- 71,486 ---------- BREWERS--1.3% Coors (Adolph) Co. Class B ........................... 1,200 74,760 ---------- CONSTRUCTION MATERIALS--0.8% Martin Marietta Materials, Inc. ...................... 1,200 46,800 ---------- DATA PROCESSING SERVICES--2.3% Ceridian Corp. (b) ................................... 5,500 104,390 Certegy, Inc. (b) .................................... 600 22,266 ---------- 126,656 ---------- DIVERSIFIED CHEMICALS--0.9% Engelhard Corp. ...................................... 1,700 48,144 ---------- DIVERSIFIED COMMERCIAL SERVICES--4.7% Block (H&R), Inc. .................................... 1,600 73,840 Convergys Corp. (b) .................................. 4,500 87,660 IMS Health, Inc. ..................................... 5,700 102,315 ---------- 263,815 ---------- DIVERSIFIED FINANCIAL SERVICES--2.3% Ambac Financial Group, Inc. .......................... 700 47,040 Principal Financial Group (The), Inc. (b) ............ 2,700 83,700 ---------- 130,740 ---------- ELECTRIC UTILITIES--1.7% Wisconsin Energy Corp. ............................... 3,800 96,026 ---------- ELECTRICAL COMPONENTS & EQUIPMENT--1.8% Molex, Inc. Class A .................................. 1,900 52,117 Rockwell Automation, Inc. ............................ 2,500 49,950 ---------- 102,067 ---------- ELECTRONIC EQUIPMENT & INSTRUMENTS--6.4% Amphenol Corp. Class A (b) ........................... 1,800 64,800 Diebold, Inc. ........................................ 1,300 48,412 Millipore Corp. (b) .................................. 1,400 44,772 Roper Industries, Inc. ............................... 1,500 55,950 Vishay Intertechnology, Inc. (b) ..................... 2,500 55,000 Waters Corp. (b) ..................................... 3,500 93,450 ---------- 362,384 ---------- ENVIRONMENTAL SERVICES--1.7% Republic Services, Inc. (b) .......................... 5,000 95,350 ---------- FOOTWEAR--1.0% NIKE, Inc. Class B ................................... 1,000 53,650 ---------- SHARES VALUE ------ ---------- FOREST PRODUCTS--0.6% Louisiana-Pacific Corp. .............................. 3,000 $ 31,770 ---------- GENERAL MERCHANDISE STORES--0.8% Family Dollar Stores, Inc. ........................... 1,200 42,300 ---------- HEALTH CARE DISTRIBUTORS & SERVICES--1.2% Quest Diagnostics, Inc. (b) .......................... 800 68,840 ---------- HEALTH CARE EQUIPMENT--5.3% Apogent Technologies, Inc. (b) ....................... 5,700 117,249 Bard (C.R.), Inc. .................................... 1,000 56,580 Beckman Coulter, Inc. ................................ 1,700 84,830 St. Jude Medical, Inc. (b) ........................... 500 36,925 ---------- 295,584 ---------- HOME FURNISHINGS--1.2% Mohawk Industries, Inc. (b) .......................... 1,053 64,791 ---------- HOUSEHOLD APPLIANCES--2.0% Black & Decker Corp. (The) ........................... 1,100 53,020 Stanley Works (The) .................................. 1,500 61,515 ---------- 114,535 ---------- HOUSEHOLD PRODUCTS--2.4% Clorox Co. (The) ..................................... 1,100 45,485 Dial Corp. (The) ..................................... 4,600 92,092 ---------- 137,577 ---------- HOUSEWARES & SPECIALTIES--1.9% Fortune Brands, Inc. ................................. 1,000 56,000 Newell Rubbermaid, Inc. .............................. 1,400 49,084 ---------- 105,084 ---------- INDUSTRIAL MACHINERY--6.2% Dover Corp. .......................................... 3,000 105,000 ITT Industries, Inc. ................................. 700 49,420 Kennametal, Inc. ..................................... 1,000 36,600 Pentair, Inc. ........................................ 1,100 52,888 SPX Corp. (b) ........................................ 900 105,750 ---------- 349,658 ---------- IT CONSULTING & SERVICES--0.8% Affiliated Computer Services, Inc. Class A (b) ....... 900 42,732 ---------- LEISURE PRODUCTS--3.3% Brunswick Corp. ...................................... 5,000 140,000 Mattel, Inc. ......................................... 2,200 46,376 ---------- 186,376 ---------- MANAGED HEALTH CARE--1.0% WellPoint Health Networks, Inc. (b) .................. 700 54,467 ---------- METAL & GLASS CONTAINERS--0.8% Pactiv Corp. (b) ..................................... 1,900 45,220 ---------- OFFICE ELECTRONICS--1.5% Zebra Technologies Corp. Class A (b) ................. 1,700 81,974 ---------- OFFICE SERVICES & SUPPLIES--1.2% Miller (Herman), Inc. ................................ 3,300 66,990 ---------- OIL & GAS EQUIPMENT & SERVICES--1.7% BJ Services Co. (b) .................................. 1,000 33,880 Cooper Cameron Corp. (b) ............................. 600 29,052 Weatherford International Ltd (b) .................... 800 34,560 ---------- 97,492 ---------- OIL & GAS REFINING, MARKETING & TRANSPORTATION--0.5% Valero Energy Corp. .................................. 800 29,936 ----------
See Notes to Financial Statements 11 PHOENIX-AIM MID-CAP EQUITY SERIES
SHARES VALUE ------ ---------- PERSONAL PRODUCTS--0.7% Avon Products, Inc. .................................. 800 $ 41,792 ---------- PHARMACEUTICALS--0.7% Watson Pharmaceuticals, Inc. (b) ..................... 1,500 37,905 ---------- PROPERTY & CASUALTY INSURANCE--2.0% MGIC Investment Corp. ................................ 800 54,240 Odyssey Re Holdings Corp. ............................ 3,400 59,126 ---------- 113,366 ---------- RAILROADS--0.8% Norfolk Southern Corp. ............................... 2,000 46,760 ---------- RESTAURANTS--1.7% Jack in the Box, Inc. (b) ............................ 1,600 50,880 Outback Steakhouse, Inc. (b) ......................... 1,300 45,630 ---------- 96,510 ---------- SEMICONDUCTOR EQUIPMENT--0.7% FEI Co. (b) .......................................... 1,700 41,667 ---------- SEMICONDUCTORS--2.2% Integrated Device Technology, Inc. (b) ............... 1,900 34,466 Lattice Semiconductor Corp. (b) ...................... 4,500 39,330 Microchip Technology, Inc. (b) ....................... 1,800 49,374 ---------- 123,170 ---------- SPECIALTY CHEMICALS--2.6% Cambrex Corp. ........................................ 1,100 44,110 OM Group, Inc. ....................................... 700 43,400 Rohm & Haas Co. ...................................... 1,400 56,686 ---------- 144,196 ---------- SPECIALTY STORES--0.7% Barnes & Noble, Inc. (b) ............................. 1,500 39,645 ---------- SYSTEMS SOFTWARE--3.6% BMC Software, Inc. (b) ............................... 4,700 78,020 Computer Associates International, Inc. .............. 6,900 109,641 Wind River Systems, Inc. (b) ......................... 3,100 15,531 ---------- 203,192 ---------- TELECOMMUNICATIONS EQUIPMENT--1.1% Advanced Fibre Communications, Inc. (b) .............. 3,700 61,198 ---------- TOTAL COMMON STOCKS (Identified cost $4,622,711) .................................... 4,606,498 ---------- FOREIGN COMMON STOCKS--3.6% INDUSTRIAL MACHINERY--0.9% Mettler-Toledo International, Inc. (Switzerland) (b) . 1,300 47,931 ---------- OIL & GAS DRILLING--0.5% Noble Corp. (Cayman Islands) (b) ..................... 800 30,880 ---------- PHARMACEUTICALS--1.4% Teva Pharmaceutical Industries Ltd. ADR (Israel) ..... 1,200 80,136 ---------- PROPERTY & CASUALTY INSURANCE--0.8% XL Capital Ltd. Class A (Bermuda) .................... 500 42,350 ---------- TOTAL FOREIGN COMMON STOCKS (Identified cost $209,103) ...................................... 201,297 ---------- TOTAL LONG TERM INVESTMENTS--85.6% (Identified cost $4,831,814) .................................... 4,807,795 ---------- STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ----- --------- SHORT-TERM OBLIGATIONS--16.5% FEDERAL AGENCY SECURITIES--16.5% FHLB Discount Note 1.87%, 7/1/02 AAA $ 930 $ 930,000 ---------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $930,000) 930,000 ---------- TOTAL INVESTMENTS--102.1% (Identified Cost $5,761,814) 5,737,795(a) Other assets and liabilities, net--(2.1)% (120,715) ---------- NET ASSETS--100.0% $5,617,080 ========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $337,161 and gross depreciation of $362,759 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $5,763,393. (b) Non-income producing.
See Notes to Financial Statements 12 PHOENIX-AIM MID-CAP EQUITY SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $5,761,814) .......................... $5,737,795 Cash ................................................................................. 173 Receivables Investment securities sold ......................................................... 34,805 Fund shares sold ................................................................... 17,976 Receivable from adviser ............................................................ 5,694 Dividends and interest ............................................................. 1,131 ---------- Total assets ..................................................................... 5,797,574 ---------- LIABILITIES Payables Investment securities purchased .................................................... 146,376 Fund shares repurchased ............................................................ 82 Professional fee ................................................................... 20,896 Financial agent fee ................................................................ 3,745 Trustees' fee ...................................................................... 2,183 Accrued expenses ..................................................................... 7,212 ---------- Total liabilities ................................................................ 180,494 ---------- NET ASSETS ......................................................................... $5,617,080 ========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................... $5,567,473 Accumulated net investment loss .................................................... (3,539) Accumulated net realized gain ...................................................... 77,165 Net unrealized depreciation ........................................................ (24,019) ---------- NET ASSETS ........................................................................... $5,617,080 ========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ..... 536,617 ========== Net asset value and offering price per share ......................................... $10.47 ======
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends .......................................................................... $ 12,942 Interest ........................................................................... 7,693 Foreign tax withheld ............................................................... (30) --------- Total investment income .......................................................... 20,605 --------- EXPENSES Investment advisory fee ............................................................ 19,912 Financial agent fee ................................................................ 21,965 Professional ....................................................................... 15,278 Custodian .......................................................................... 7,276 Trustees ........................................................................... 3,455 Printing ........................................................................... 2,605 Miscellaneous ...................................................................... 2,833 --------- Total expenses ................................................................... 73,324 Less expenses borne by investment adviser ........................................ (48,256) Custodian fees paid indirectly ................................................... (6) --------- Net expenses ..................................................................... 25,062 --------- NET INVESTMENT LOSS .................................................................. (4,457) --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities .................................................... 78,084 Net change in unrealized appreciation (depreciation) on investments ................ (235,330) --------- NET LOSS ON INVESTMENTS .............................................................. (157,246) --------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................. $(161,703) =========
See Notes to Financial Statements 13 PHOENIX-AIM MID-CAP EQUITY SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED FROM INCEPTION 6/30/02 10/29/01 TO (UNAUDITED) 12/31/01 ----------- -------------- FROM OPERATIONS Net investment income (loss) ..................................................................... $ (4,457) $ 918 Net realized gain (loss) ......................................................................... 78,084 5,491 Net change in unrealized appreciation (depreciation) ............................................. (235,330) 211,311 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...................................... (161,703) 217,720 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net realized short term gain ..................................................................... (6,410) -- ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ............................. (6,410) -- ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (220,494 and 353,886 shares, respectively) ......................... 2,433,760 3,552,216 Net asset value of shares issued from reinvestment of distributions (617 and 0 shares, respectively) ............................................................... 6,410 -- Cost of shares repurchased (36,625 and 1,755 shares, respectively) ............................... (407,052) (17,861) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ........................................ 2,033,118 3,534,355 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS ............................................................ 1,865,005 3,752,075 NET ASSETS Beginning of period .............................................................................. 3,752,075 -- ----------- ----------- END OF PERIOD (INCLUDING ACCUMULATED NET INVESTMENT LOSS OF $(3,539) AND UNDISTRIBUTED NET INVESTMENT INCOME OF $918), RESPECTIVELY ................................................... $ 5,617,080 $ 3,752,075 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED FROM INCEPTION 6/30/02 10/29/01 TO (UNAUDITED) 12/31/01 ----------- -------------- Net asset value, beginning of period ........... $10.66 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ................. (0.01) --(4) Net realized and unrealized gain (loss) ...... (0.17) 0.66 ------ ------ TOTAL FROM INVESTMENT OPERATIONS ........... (0.18) 0.66 ------ ------ LESS DISTRIBUTIONS Distributions from net realized gains ........ (0.01) -- ------ ------ TOTAL DISTRIBUTIONS ........................ (0.01) -- ------ ------ CHANGE IN NET ASSET VALUE ...................... (0.19) 0.66 ------ ------ NET ASSET VALUE, END OF PERIOD ................. $10.47 $10.66 ====== ====== Total return ................................... (1.64)%(3) 6.55%(3) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ........ $5,617 $3,752 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) ........................ 1.07%(2)(5) 1.05%(2) Net investment income ........................ (0.19)%(2) 0.16%(2) Portfolio turnover ............................. 25%(3) 12%(3) (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 3.13% and 7.13% for the periods ended June 30, 2002 and December 31, 2001, respectively. (2) Annualized. (3) Not annualized. (4) Amount is less than $0.01. (5) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. See Notes to Financial Statements 14 PHOENIX-ALLIANCE/BERNSTEIN GROWTH + VALUE SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE -------- ---------- COMMON STOCKS--89.8% BANKS--10.8% Bank of America Corp. ................................ 1,400 $ 98,504 Bank One Corp. ....................................... 1,700 65,416 FleetBoston Financial Corp. .......................... 2,000 64,700 Golden West Financial Corp. .......................... 1,000 68,780 National City Corp. .................................. 1,500 49,875 Wachovia Corp. ....................................... 1,900 72,542 Washington Mutual, Inc. .............................. 2,500 92,775 ---------- 512,592 ---------- BIOTECHNOLOGY--1.0% Amgen, Inc. (b) ...................................... 1,100 46,068 ---------- BROADCASTING & CABLE TV--1.6% Comcast Corp. Class A (b) ............................ 3,200 76,288 ---------- COMPUTER HARDWARE--3.0% Dell Computer Corp. (b) .............................. 2,900 75,806 Hewlett-Packard Co. .................................. 4,200 64,176 ---------- 139,982 ---------- CONSUMER FINANCE--1.8% MBNA Corp. ........................................... 2,600 85,982 ---------- DEPARTMENT STORES--4.0% Federated Department Stores, Inc. (b) ................ 900 35,730 Kohl's Corp. (b) ..................................... 1,900 133,152 Sears, Roebuck and Co. ............................... 400 21,720 ---------- 190,602 ---------- DIVERSIFIED CHEMICALS--2.8% Dow Chemical Co. (The) ............................... 2,100 72,198 Du Pont (E.I.) de Nemours & Co. ...................... 1,300 57,720 ---------- 129,918 ---------- DIVERSIFIED FINANCIAL SERVICES--8.5% Citigroup, Inc. ...................................... 3,300 127,875 Freddie Mac .......................................... 2,100 128,520 Goldman Sachs Group, Inc. (The) ...................... 650 47,677 Lehman Brothers Holdings, Inc. ....................... 1,000 62,520 Morgan Stanley ....................................... 800 34,464 ---------- 401,056 ---------- DRUG RETAIL--2.1% Walgreen Co. ......................................... 2,600 100,438 ---------- ELECTRIC UTILITIES--3.2% Ameren Corp. ......................................... 1,200 51,612 American Electric Power Co., Inc. .................... 1,800 72,036 Cinergy Corp. ........................................ 800 28,792 ---------- 152,440 ---------- ELECTRICAL COMPONENTS & EQUIPMENT--0.5% Cooper Industries Ltd. Class A ....................... 600 23,580 ---------- ELECTRONIC EQUIPMENT & INSTRUMENTS--1.2% Solectron Corp. (b) .................................. 7,100 43,665 Tech Data Corp. (b) .................................. 300 11,355 ---------- 55,020 ---------- GENERAL MERCHANDISE STORES--2.5% Target Corp. ......................................... 1,800 68,580 Wal-Mart Stores, Inc. ................................ 900 49,509 ---------- 118,089 ---------- SHARES VALUE -------- ---------- HEALTH CARE DISTRIBUTORS & SERVICES--1.3% Cardinal Health, Inc. ................................ 1,000 $ 61,410 ---------- HEALTH CARE FACILITIES--1.2% Tenet Healthcare Corp. (b) ........................... 800 57,240 ---------- HOME FURNISHINGS--0.8% Leggett & Platt, Inc. ................................ 1,600 37,440 ---------- HOME IMPROVEMENT RETAIL--2.5% Home Depot, Inc. (The) ............................... 3,200 117,536 ---------- HOMEBUILDING--0.6% Centex Corp. ......................................... 500 28,895 ---------- HOUSEHOLD APPLIANCES--0.7% Whirlpool Corp. ...................................... 500 32,680 ---------- INDUSTRIAL CONGLOMERATES--2.5% General Electric Co. ................................. 4,000 116,200 ---------- INDUSTRIAL MACHINERY--0.6% Eaton Corp. .......................................... 400 29,100 ---------- INTEGRATED OIL & GAS--4.2% Conoco, Inc. ......................................... 900 25,020 Occidental Petroleum Corp. ........................... 2,400 71,976 Phillips Petroleum Co. ............................... 1,700 100,096 ---------- 197,092 ---------- INTEGRATED TELECOMMUNICATION SERVICES--0.7% Qwest Communications International, Inc. (b) ......... 11,100 31,080 WorldCom, Inc. - WorldCom Group (b)(c) ............... 18,100 1,629 ---------- 32,709 ---------- IT CONSULTING & SERVICES--1.2% Electronic Data Systems Corp. ........................ 1,500 55,725 ---------- MANAGED HEALTH CARE--4.5% CIGNA Corp. .......................................... 500 48,710 UnitedHealth Group, Inc. ............................. 1,800 164,790 ---------- 213,500 ---------- METAL & GLASS CONTAINERS--0.7% Smurfit-Stone Container Corp. (b) .................... 2,000 30,840 ---------- MOVIES & ENTERTAINMENT--3.1% AOL Time Warner, Inc. (b) ............................ 2,600 38,246 Viacom, Inc. Class B (b) ............................. 2,400 106,488 ---------- 144,734 ---------- MULTI-LINE INSURANCE--2.0% American International Group, Inc. ................... 1,400 95,522 ---------- PAPER PRODUCTS--2.1% Georgia-Pacific Corp. ................................ 800 19,664 International Paper Co. .............................. 1,825 79,534 ---------- 99,198 ---------- PHARMACEUTICALS--6.5% Johnson & Johnson .................................... 800 41,808 Pfizer, Inc. ......................................... 5,800 203,000 Pharmacia Corp. ...................................... 1,700 63,665 ---------- 308,473 ---------- PROPERTY & CASUALTY INSURANCE--1.3% Allstate Corp. (The) ................................. 1,700 62,866 ---------- PUBLISHING & PRINTING--0.3% New York Times Co. (The) Class A ..................... 300 15,450 ----------
See Notes to Financial Statements 15 PHOENIX-ALLIANCE/BERNSTEIN GROWTH + VALUE SERIES
SHARES VALUE -------- ---------- RAILROADS--1.8% Burlington Northern Santa Fe Corp. ................... 2,900 $ 87,000 ---------- SEMICONDUCTORS--1.9% Intel Corp. .......................................... 4,915 89,797 ---------- SYSTEMS SOFTWARE--2.4% Microsoft Corp. (b) .................................. 2,100 114,870 ---------- TELECOMMUNICATIONS EQUIPMENT--1.1% Corning, Inc. (b) .................................... 6,200 22,010 Tellabs, Inc. (b) .................................... 4,800 29,760 ---------- 51,770 ---------- TOBACCO--0.6% Philip Morris Cos., Inc. ............................. 650 28,392 ---------- TRADING COMPANIES & DISTRIBUTORS--1.6% Genuine Parts Co. .................................... 2,200 76,714 ---------- WIRELESS TELECOMMUNICATION SERVICES--0.6% Sprint Corp. (PCS Group) (b) ......................... 6,400 28,608 ---------- TOTAL COMMON STOCKS (Identified cost $4,754,470) .................................... 4,245,816 ---------- FOREIGN COMMON STOCKS--3.4% AUTO PARTS & EQUIPMENT--1.3% Magna International, Inc. Class A (Canada) ........... 900 61,965 ---------- TELECOMMUNICATIONS EQUIPMENT--2.1% Nokia Oyj ADR (Finland) .............................. 5,500 79,640 Nortel Networks Corp. (Canada) (b) ................... 14,600 21,170 ---------- 100,810 ---------- TOTAL FOREIGN COMMON STOCKS (Identified cost $191,715) ...................................... 162,775 ---------- TOTAL LONG TERM INVESTMENTS--93.2% (Identified cost $4,946,185) .................................... 4,408,591 ---------- PAR VALUE (000) VALUE ------- ---------- SHORT-TERM OBLIGATIONS--4.9% MONEY MARKET MUTUAL FUNDS--4.9% SSgA Money Market Fund (1.65% seven day effective yield) ................................... $ 232 $ 231,588 ---------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $231,588) ...................................... 231,588 ---------- TOTAL INVESTMENTS--98.1% (Identified Cost $5,177,773) .................................... 4,640,179(a) Other assets and liabilities, net--1.9% ......................... 87,667 ---------- NET ASSETS--100.0% ................................................ $4,727,846 ========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $249,761 and gross depreciation of $799,652 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $5,190,070. (b) Non-income producing. (c) Illiquid. Security valued at fair value as determined in good faith by or under the direction of the Trustees. At June 30, 2002, this security amounted to a value of $1,629 or 0.03% of net assets.
See Notes to Financial Statements 16 PHOENIX-ALLIANCE/BERNSTEIN GROWTH + VALUE SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $5,177,773) .......................... $4,640,179 Cash ................................................................................. 94,249 Receivables Fund shares sold ................................................................... 22,516 Dividends and interest ............................................................. 6,725 Receivable from adviser ............................................................ 5,734 ---------- Total assets ..................................................................... 4,769,403 ---------- LIABILITIES Payables Fund shares repurchased ............................................................ 6,693 Professional fee ................................................................... 20,433 Printing fee ....................................................................... 8,434 Financial agent fee ................................................................ 3,724 Trustees' fee ...................................................................... 1,721 Accrued expenses ..................................................................... 552 ---------- Total liabilities ................................................................ 41,557 ---------- NET ASSETS ........................................................................... $4,727,846 ========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................... $5,339,069 Undistributed net investment income ................................................ 8,871 Accumulated net realized loss ...................................................... (82,500) Net unrealized depreciation ........................................................ (537,594) ---------- NET ASSETS ........................................................................... $4,727,846 ========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ..... 526,350 ========== Net asset value and offering price per share ......................................... $8.98 =====
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends .......................................................................... $ 30,341 Interest ........................................................................... 1,831 Foreign taxes withheld ............................................................. (274) --------- Total investment income .......................................................... 31,898 --------- EXPENSES Financial agent fee ................................................................ 21,850 Investment advisory fee ............................................................ 18,325 Professional ....................................................................... 14,815 Custodian .......................................................................... 4,338 Trustees ........................................................................... 3,455 Printing ........................................................................... 3,125 Miscellaneous ...................................................................... 2,826 --------- Total expenses ................................................................... 68,734 Less expenses borne by investment adviser ........................................ (45,707) --------- Net expenses ..................................................................... 23,027 --------- NET INVESTMENT INCOME ................................................................ 8,871 --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................... (81,557) Net change in unrealized appreciation (depreciation) on investments ................ (720,253) --------- NET LOSS ON INVESTMENTS .............................................................. (801,810) --------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................. $(792,939) =========
See Notes to Financial Statements 17 PHOENIX-ALLIANCE/BERNSTEIN GROWTH + VALUE SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED FROM INCEPTION 6/30/02 10/29/01 TO (UNAUDITED) 12/31/01 ----------- -------------- FROM OPERATIONS Net investment income (loss) ................................................................... $ 8,871 $ 4,057 Net realized gain (loss) ....................................................................... (81,557) (943) Net change in unrealized appreciation (depreciation) ........................................... (720,253) 182,659 ---------- ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................................... (792,939) 185,773 ---------- ---------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income .......................................................................... -- (4,117) ---------- ---------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ...................................... -- (4,117) ---------- ---------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (217,112 and 346,666 shares, respectively) ....................... 2,188,540 3,524,549 Net asset value of shares issued from reinvestment of distributions (0 and 384 shares, respectively) ................................................................................ -- 4,117 Cost of shares repurchased (37,484 and 328 shares, respectively) ............................... (374,604) (3,473) ---------- ---------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ...................................... 1,813,936 3,525,193 ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS .......................................................... 1,020,997 3,706,849 NET ASSETS Beginning of period ............................................................................ 3,706,849 -- ---------- ---------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $8,871 AND $0, RESPECTIVELY) ................................................................................ $4,727,846 $3,706,849 ========== ==========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED FROM INCEPTION 6/30/02 10/29/01 TO (UNAUDITED) 12/31/01 ----------- -------------- Net asset value, beginning of period ............ $10.69 $10.00 INCOME FROM INVESTMENT OPERATIONS (4) Net investment income (loss) .................. 0.02 0.01 Net realized and unrealized gain (loss) ....... (1.73) 0.69 ------ ------ TOTAL FROM INVESTMENT OPERATIONS ............ (1.71) 0.70 ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .......... -- (0.01) ------ ------ TOTAL DISTRIBUTIONS ......................... -- (0.01) ------ ------ CHANGE IN NET ASSET VALUE ....................... (1.71) 0.69 ------ ------ NET ASSET VALUE, END OF PERIOD .................. $ 8.98 $10.69 ====== ====== Total return .................................... (15.98)%(3) 7.03%(3) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ......... $4,728 $3,707 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) ......................... 1.07%(2) 1.05%(2) Net investment income ......................... 0.41%(2) 0.80%(2) Portfolio turnover .............................. 13%(3) 1%(3) (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 3.19% and 7.93% for the periods ended June 30, 2002 and December 31, 2001, respectively. (2) Annualized. (3) Not annualized. (4) Per share income from investment operations may vary from anticipated results depending on the timing of share purchases and redemptions. See Notes to Financial Statements 18 PHOENIX-DEUTSCHE DOW 30 SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE ------- ---------- COMMON STOCKS--99.1% AEROSPACE & DEFENSE--10.8% Boeing Co. (The) ..................................... 15,682 $ 705,690 Honeywell International, Inc. ........................ 15,682 552,477 United Technologies Corp. ............................ 15,682 1,064,808 ----------- 2,322,975 ----------- ALUMINUM--2.4% Alcoa, Inc. .......................................... 15,682 519,858 ----------- AUTOMOBILE MANUFACTURERS--3.9% General Motors Corp. ................................. 15,682 838,203 ----------- COMPUTER HARDWARE--6.4% Hewlett-Packard Co. .................................. 15,682 239,621 International Business Machines Corp. ................ 15,682 1,129,104 ----------- 1,368,725 ----------- CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS--3.6% Caterpillar, Inc. .................................... 15,682 767,634 ----------- DIVERSIFIED CHEMICALS--3.2% Du Pont (E.I.) de Nemours & Co. ...................... 15,682 696,281 ----------- DIVERSIFIED FINANCIAL SERVICES--7.9% American Express Co. ................................. 15,682 569,570 Citigroup, Inc. ...................................... 15,682 607,678 J.P. Morgan Chase & Co. .............................. 15,682 531,933 ----------- 1,709,181 ----------- GENERAL MERCHANDISE STORES--4.0% Wal-Mart Stores, Inc. ................................ 15,682 862,667 ----------- HOME IMPROVEMENT RETAIL--2.7% Home Depot, Inc. (The) ............................... 15,682 576,000 ----------- HOUSEHOLD PRODUCTS--6.5% Procter & Gamble Co. (The) ........................... 15,682 1,400,403 ----------- INDUSTRIAL CONGLOMERATES--11.1% 3M Co. ............................................... 15,682 1,928,886 General Electric Co. ................................. 15,682 455,562 ----------- 2,384,448 ----------- INTEGRATED OIL & GAS--3.0% Exxon Mobil Corp. .................................... 15,682 641,707 ----------- INTEGRATED TELECOMMUNICATION SERVICES--3.0% AT&T Corp. ........................................... 15,682 167,797 SBC Communications, Inc. ............................. 15,682 478,301 ----------- 646,098 ----------- MOVIES & ENTERTAINMENT--1.4% Walt Disney Co. (The) ................................ 15,682 296,390 ----------- PAPER PRODUCTS--3.2% International Paper Co. .............................. 15,682 683,421 ----------- SHARES VALUE ------- ---------- PHARMACEUTICALS--7.5% Johnson & Johnson .................................... 15,682 $ 819,541 Merck & Co., Inc. .................................... 15,682 794,137 ----------- 1,613,678 ----------- PHOTOGRAPHIC PRODUCTS--2.1% Eastman Kodak Co. .................................... 15,682 457,444 ----------- RESTAURANTS--2.1% McDonald's Corp. ..................................... 15,682 446,154 ----------- SEMICONDUCTORS--1.3% Intel Corp. .......................................... 15,682 286,510 ----------- SOFT DRINKS--4.1% Coca-Cola Co. (The) .................................. 15,682 878,192 ----------- SYSTEMS SOFTWARE--4.0% Microsoft Corp. (b) .................................. 15,682 857,805 ----------- TOBACCO--3.2% Philip Morris Cos., Inc. ............................. 15,682 684,990 ----------- EXCHANGE TRADED FUNDS--1.7% DIAMONDS Trust, Series I ............................. 3,880 358,900 ----------- TOTAL COMMON STOCKS (Identified cost $24,336,886) .................................... 21,297,664 ----------- TOTAL LONG TERM INVESTMENTS--99.1% (Identified cost $24,336,886) .................................... 21,297,664 ----------- STANDARD PAR & POOR'S VALUE RATING (000) -------- ----- SHORT-TERM OBLIGATIONS--0.5% U.S. TREASURY BILLS--0.0% U.S. Treasury Bills 0%, 9/19/02 .......... AAA $ 15 14,945 ----------- REPURCHASE AGREEMENTS--0.5% State Street Bank & Trust Co. repurchase agreement 0.25%, dated 6/28/02 due 7/1/02, repurchase price $103,002, collateralized by U.S. Treasury Note 6.75%, 5/15/05, market value $110,000 ............................... 103 103,000 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $117,945) ....................................... 117,945 ----------- TOTAL INVESTMENTS--99.6% (Identified cost $24,454,831) .................................... 21,415,609(a) Other assets and liabilities, net--0.4% .......................... 78,262 ----------- NET ASSETS--100.0% ................................................. $21,493,871 =========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $1,366,011 and gross depreciation of $4,538,358 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $24,587,956. (b) Non-income producing.
See Notes to Financial Statements 19 PHOENIX-DEUTSCHE DOW 30 SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $24,454,831) ................................................. $21,415,609 Cash ......................................................................................................... 579 Receivables Investment securities sold ................................................................................. 71,015 Fund shares sold ........................................................................................... 40,167 Dividends and interest ..................................................................................... 39,118 Receivable from adviser .................................................................................... 1,808 ----------- Total assets ............................................................................................. 21,568,296 ----------- LIABILITIES Payables Fund shares repurchased .................................................................................... 12,840 Investment securities purchased ............................................................................ 4,969 Professional fee ........................................................................................... 25,996 Printing fee ............................................................................................... 19,718 Financial agent fee ........................................................................................ 5,071 Trustees' fee .............................................................................................. 3,717 Variation margin from future contracts ..................................................................... 720 Accrued expenses ............................................................................................. 1,394 ----------- Total liabilities ........................................................................................ 74,425 ----------- NET ASSETS ................................................................................................... $21,493,871 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ........................................................... $24,970,417 Undistributed net investment income ........................................................................ 79,472 Accumulated net realized loss .............................................................................. (511,114) Net unrealized depreciation ................................................................................ (3,044,904) ----------- NET ASSETS ................................................................................................... $21,493,871 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ............................. 2,686,344 =========== Net asset value and offering price per share ................................................................. $8.00 =====
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends .................................................................................................. $ 220,912 Interest ................................................................................................... 1,067 ----------- Total investment income .................................................................................. 221,979 ----------- EXPENSES Investment advisory fee .................................................................................... 42,953 Financial agent fee ........................................................................................ 30,333 Professional ............................................................................................... 17,734 Custodian .................................................................................................. 7,567 Printing ................................................................................................... 6,234 Trustees ................................................................................................... 3,455 Miscellaneous .............................................................................................. 12,209 ----------- Total expenses ........................................................................................... 120,485 Less expenses borne by investment adviser ................................................................ (50,997) Custodian fees paid indirectly ........................................................................... (12) ----------- Net expenses ............................................................................................. 69,476 ----------- NET INVESTMENT INCOME ........................................................................................ 152,503 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ............................................................................ (402,282) Net realized loss on futures contracts ..................................................................... (20,990) Net change in unrealized appreciation (depreciation) on investments ........................................ (1,430,430) ----------- NET LOSS ON INVESTMENTS ...................................................................................... (1,853,702) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ......................................................... $(1,701,199) ===========
See Notes to Financial Statements 20 PHOENIX-DEUTSCHE DOW 30 SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ----------- ----------- FROM OPERATIONS Net investment income (loss) ................................................................... $ 152,503 $ 247,310 Net realized gain (loss) ....................................................................... (423,272) 36,511 Net change in unrealized appreciation (depreciation) ........................................... (1,430,430) (1,225,559) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................................... (1,701,199) (941,738) ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income .......................................................................... (80,421) (243,894) Net realized short-term gains .................................................................. (20,909) (187,932) Net realized long-term gains ................................................................... (21,982) (115,333) ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ...................................... (123,312) (547,159) ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (674,063 and 1,551,688 shares, respectively) ..................... 5,876,020 13,567,385 Net asset value of shares issued from reinvestment of distributions (15,366 and 60,901 shares, respectively) ................................................................................ 123,312 547,159 Cost of shares repurchased (735,592 and 518,675 shares, respectively) .......................... (6,365,283) (4,444,227) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ...................................... (365,951) 9,670,317 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS .......................................................... (2,190,462) 8,181,420 NET ASSETS Beginning of period ............................................................................ 23,684,333 15,502,913 ----------- ----------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $79,472 AND $7,390, RESPECTIVELY) ................................................................................ $21,493,871 $23,684,333 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS YEAR ENDED ENDED DECEMBER 31, FROM INCEPTION 6/30/02 ----------------- 12/15/99 TO (UNAUDITED) 2001 2000 12/31/99 ----------- ------ ------ -------------- Net asset value, beginning of period .................... $ 8.67 $ 9.46 $10.24 $10.00 INCOME FROM INVESTMENT OPERATIONS (4) Net investment income (loss) .......................... 0.06 0.11(6) 0.08 0.01 Net realized and unrealized gain (loss) ............... (0.68) (0.66) (0.65) 0.24 ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .................... (0.62) (0.55) (0.57) 0.25 ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .................. (0.03) (0.10) (0.08) (0.01) Distributions from net realized gains ................. (0.02) (0.14) (0.13) -- ------ ------ ------ ------ TOTAL DISTRIBUTIONS ................................. (0.05) (0.24) (0.21) (0.01) ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ............................... (0.67) (0.79) (0.78) 0.24 ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD .......................... $ 8.00 $ 8.67 $ 9.46 $10.24 ====== ====== ====== ====== Total return ............................................ (7.16)%(2) (5.98)% (5.56)% 2.52%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ................... $21,494 $23,684 $15,503 $5,143 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ................................ 0.57%(1)(5) 0.50%(5) 0.50% 0.50%(1) Net investment income ................................. 1.24%(1) 1.29% 1.08% 2.75%(1) Portfolio turnover ...................................... 24%(2) 38% 93% 1%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.98%, 1.12%, 1.60% and 7.81% for the periods ended June 30, 2002, December 31, 2001, 2000 and 1999, respectively. (4) Per share income from investment operations may vary from anticipated results depending on the timing of share purchases and redemptions. (5) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (6) Computed using average shares outstanding.
See Notes to Financial Statements 21 PHOENIX-DEUTSCHE NASDAQ-100 INDEX(R) SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE ------ ---------- COMMON STOCKS--97.3% ADVERTISING--0.3% TMP Worldwide, Inc. (b) .............................. 1,126 $ 24,209 ---------- ALTERNATIVE CARRIERS--0.6% PanAmSat Corp. (b) ................................... 1,904 43,030 ---------- APPLICATION SOFTWARE--6.0% Citrix Systems, Inc. (b) ............................. 2,038 12,310 Compuware Corp. (b) .................................. 2,170 13,172 Electronic Arts, Inc. (b) ............................ 1,310 86,525 i2 Technologies, Inc. (b) ............................ 4,321 6,395 Intuit, Inc. (b) ..................................... 2,512 124,897 Mercury Interactive Corp. (b) ........................ 840 19,286 PeopleSoft, Inc. (b) ................................. 4,135 61,529 Rational Software Corp. (b) .......................... 1,914 15,714 Siebel Systems, Inc. (b) ............................. 5,228 74,342 Synopsys, Inc. (b) ................................... 661 36,229 ---------- 450,399 ---------- BIOTECHNOLOGY--11.6% Abgenix, Inc. (b) .................................... 780 7,644 Amgen, Inc. (b) ...................................... 4,564 191,140 Biogen, Inc. (b) ..................................... 1,720 71,260 Cephalon, Inc. (b) ................................... 475 21,470 Chiron Corp. (b) ..................................... 2,504 88,516 Genzyme Corp. (b) .................................... 2,526 48,600 Gilead Sciences, Inc. (b) ............................ 1,808 59,447 Human Genome Sciences, Inc. (b) ...................... 1,204 16,134 ICOS Corp. (b) ....................................... 552 9,362 IDEC Pharmaceuticals Corp. (b) ....................... 1,559 55,266 ImClone Systems, Inc. (b) ............................ 709 6,165 Immunex Corp. (b) .................................... 7,137 159,441 Invitrogen Corp. (b) ................................. 470 15,045 MedImmune, Inc. (b) .................................. 2,522 66,581 Millennium Pharmaceuticals, Inc. (b) ................. 2,913 35,393 Protein Design Labs, Inc. (b) ........................ 804 8,731 Sepracor, Inc. (b) ................................... 797 7,611 ---------- 867,806 ---------- BROADCASTING & CABLE TV--3.3% Charter Communications, Inc. Class A (b) ............. 2,883 11,763 Comcast Corp. Class A (b) ............................ 4,233 100,915 EchoStar Communications Corp. Class A (b) ............ 2,351 43,634 USA Interactive (b) .................................. 3,768 88,359 ---------- 244,671 ---------- COMPUTER & ELECTRONICS RETAIL--0.5% CDW Computer Centers, Inc. (b) ....................... 843 39,461 ---------- COMPUTER HARDWARE--5.1% Apple Computer, Inc. (b) ............................. 4,675 82,841 Dell Computer Corp. (b) .............................. 8,994 235,103 Sun Microsystems, Inc. (b) ........................... 13,308 66,673 ---------- 384,617 ---------- COMPUTER STORAGE & PERIPHERALS--0.5% Network Appliance, Inc. (b) .......................... 3,290 40,928 ---------- CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS--0.7% PACCAR, Inc. ......................................... 1,223 54,289 ---------- DATA PROCESSING SERVICES--4.7% Concord EFS, Inc. (b) ................................ 5,427 163,570 Fiserv, Inc. (b) ..................................... 2,254 82,744 Paychex, Inc. ........................................ 3,353 104,915 ---------- 351,229 ---------- SHARES VALUE ------ ---------- DIVERSIFIED COMMERCIAL SERVICES--3.8% Apollo Group, Inc. Class A (b) ....................... 1,648 $ 64,964 Cintas Corp. ......................................... 1,920 94,906 eBay, Inc. (b) ....................................... 1,969 121,330 ---------- 281,200 ---------- ELECTRICAL COMPONENTS & EQUIPMENT--0.4% Molex, Inc. .......................................... 921 30,881 ---------- ELECTRONIC EQUIPMENT & INSTRUMENTS--0.7% Gemstar-TV Guide International, Inc. (b) ............. 4,097 22,083 Sanmina-SCI Corp. (b) ................................ 5,273 33,272 ---------- 55,355 ---------- EXCHANGE TRADED FUNDS--2.0% Nasdaq-100 Shares (b) ................................ 5,766 150,320 ---------- GENERAL MERCHANDISE STORES--1.7% Costco Wholesale Corp. (b) ........................... 2,254 87,050 Dollar Tree Stores, Inc. (b) ......................... 1,030 40,592 ---------- 127,642 ---------- HEALTH CARE DISTRIBUTORS & SERVICES--0.7% Andrx Group (b) ...................................... 654 17,638 Express Scripts, Inc. (b) ............................ 671 33,624 ---------- 51,262 ---------- HEALTH CARE EQUIPMENT--1.4% Biomet, Inc. ......................................... 3,401 92,235 Cytyc Corp. (b) ...................................... 1,219 9,289 ---------- 101,524 ---------- INTEGRATED TELECOMMUNICATION SERVICES--0.0% WorldCom, Inc. - WorldCom Group (b)(c) ............... 10,044 904 ---------- INTERNET RETAIL--0.5% Amazon.Com, Inc. (b) ................................. 2,347 38,139 ---------- INTERNET SOFTWARE & SERVICES--1.2% BEA Systems, Inc. (b) ................................ 3,545 33,713 VeriSign, Inc. (b) ................................... 2,100 15,099 Yahoo!, Inc. (b) ..................................... 2,709 39,985 ---------- 88,797 ---------- METAL & GLASS CONTAINERS--0.5% Smurfit-Stone Container Corp. (b) .................... 2,258 34,818 ---------- NETWORKING EQUIPMENT--5.3% Brocade Communications Systems, Inc. (b) ............. 2,238 39,120 Cisco Systems, Inc. (b) .............................. 24,633 343,630 Juniper Networks, Inc. (b) ........................... 2,053 11,600 ---------- 394,350 ---------- RESTAURANTS--1.7% Starbucks Corp. (b) .................................. 5,059 125,716 ---------- SEMICONDUCTOR EQUIPMENT--3.9% Applied Materials, Inc. (b) .......................... 8,018 152,502 KLA-Tencor Corp. (b) ................................. 2,160 95,019 Novellus Systems, Inc. (b) ........................... 1,395 47,430 ---------- 294,951 ---------- SEMICONDUCTORS--14.5% Altera Corp. (b) ..................................... 5,093 69,265 Applied Micro Circuits Corp. (b) ..................... 3,289 15,557 Atmel Corp. (b) ...................................... 3,304 20,683 Broadcom Corp. Class A (b) ........................... 1,677 29,415 Conexant Systems, Inc. (b) ........................... 2,689 4,356
See Notes to Financial Statements 22 PHOENIX-DEUTSCHE NASDAQ-100 INDEX(R) SERIES
SHARES VALUE ------ ---------- SEMICONDUCTORS--CONTINUED Integrated Device Technology, Inc. (b) ............... 935 $ 16,961 Intel Corp. .......................................... 22,057 402,981 Linear Technology Corp. .............................. 3,998 125,657 Maxim Integrated Products, Inc. (b) .................. 4,264 163,439 Microchip Technology, Inc. (b) ....................... 1,572 43,120 NVIDIA Corp. (b) ..................................... 1,548 26,595 PMC-Sierra, Inc. (b) ................................. 1,729 16,028 QLogic Corp. (b) ..................................... 893 34,023 RF Micro Devices, Inc. (b) ........................... 1,797 13,693 Skyworks Solutions, Inc. (b) ......................... 944 5,238 Vitesse Semiconductor Corp. (b) ...................... 2,050 6,376 Xilinx, Inc. (b) ..................................... 4,195 94,094 ---------- 1,087,481 ---------- SPECIALTY STORES--2.6% Bed Bath & Beyond, Inc. (b) .......................... 3,700 139,638 Staples, Inc. (b) .................................... 2,960 58,312 ---------- 197,950 ---------- SYSTEMS SOFTWARE--18.1% Adobe Systems, Inc. .................................. 2,198 62,643 Microsoft Corp. (b) .................................. 17,564 960,751 Oracle Corp. (b) ..................................... 21,577 204,334 Symantec Corp. (b) ................................... 1,402 46,056 VERITAS Software Corp. (b) ........................... 3,942 78,012 ---------- 1,351,796 ---------- TELECOMMUNICATIONS EQUIPMENT--4.6% ADC Telecommunications, Inc. (b) ..................... 9,368 21,453 CIENA Corp. (b) ...................................... 3,691 15,465 Comverse Technology, Inc. (b) ........................ 1,828 16,927 JDS Uniphase Corp. (b) ............................... 13,510 36,072 QUALCOMM, Inc. (b) ................................... 8,748 240,483 Tellabs, Inc. (b) .................................... 2,207 13,683 ---------- 344,083 ---------- WIRELESS TELECOMMUNICATION SERVICES--0.4% Nextel Communications, Inc. Class A (b) .............. 9,457 30,357 ---------- TOTAL COMMON STOCKS (Identified cost $12,710,581) ................................... 7,288,165 ---------- FOREIGN COMMON STOCKS--1.1% ELECTRONIC EQUIPMENT & INSTRUMENTS--0.5% Flextronics International Ltd. (Singapore) (b) ....... 5,245 37,397 ---------- INTERNET SOFTWARE & SERVICES--0.4% Check Point Software Technologies Ltd. (Israel) (b) .. 2,260 30,646 ---------- TELECOMMUNICATIONS EQUIPMENT--0.2% Telefonaktiebolaget LM Ericsson AB ADR (Sweden) ...... 8,612 12,401 ---------- TOTAL FOREIGN COMMON STOCKS (Identified cost $323,398) ...................................... 80,444 ---------- TOTAL LONG-TERM INVESTMENTS--98.4% (Identified cost $13,033,979) ................................... 7,368,609 ---------- STANDARD PAR & POOR'S VALUE RATING (000) VALUE --------- ----- ---------- SHORT-TERM OBLIGATIONS--2.4% U.S. TREASURY BILLS--0.8% U.S. Treasury Bills 1.65%, 9/19/02 (d) .... AAA $ 60 $ 59,779 ---------- REPURCHASE AGREEMENTS--1.6% State Street Bank & Trust Co. repurchase agreement, 0.25%, dated 6/28/02 due 7/1/02, repurchase price $118,002, collateralized by U.S. Treasury Note 6.75%, 5/15/05, market value $121,000 .............. 118 118,000 ---------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $177,780) ...................................... 177,779 ---------- TOTAL INVESTMENTS--100.8% (Identified cost $13,211,759) ................................... 7,546,388(a) Other assets and liabilities, net--(0.8)% ....................... (60,977) ---------- NET ASSETS--100.0% ................................................ $7,485,411 ========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $275,576 and gross depreciation of $8,245,303 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $15,516,115. (b) Non-income producing. (c) Illiquid. Security valued at fair value as determined in good faith by or under the direction of the Trustees. At June 30, 2002, this security amounted to a value of $904 or 0% of net assets. (d) All or a portion segregated as collateral for futures contracts.
See Notes to Financial Statements 23 PHOENIX-DEUTSCHE NASDAQ-100 INDEX(R) SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $13,211,759) ....................... $ 7,546,388 Cash ............................................................................... 648 Receivables Receivable from adviser .......................................................... 9,662 Fund shares sold ................................................................. 206 Dividends and interest ........................................................... 53 ----------- Total assets ................................................................... 7,556,957 ----------- LIABILITIES Payables Investment securities purchased .................................................. 10,276 Fund shares repurchased .......................................................... 11,013 Professional fee ................................................................. 20,759 Printing fee ..................................................................... 10,524 Financial agent fee .............................................................. 3,768 Trustees' fee .................................................................... 3,717 Variation margin for future contracts ............................................ 800 Accrued expenses ................................................................... 10,689 ----------- Total liabilities .............................................................. 71,546 ----------- NET ASSETS ......................................................................... $ 7,485,411 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $16,511,597 Accumulated net investment loss .................................................. (21,244) Accumulated net realized loss .................................................... (3,333,741) Net unrealized depreciation ...................................................... (5,671,201) ----------- NET ASSETS ......................................................................... $ 7,485,411 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 2,665,016 =========== Net asset value and offering price per share ....................................... $2.81 =====
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ........................................................................ $ 2,760 Interest ......................................................................... 749 ----------- Total investment income ........................................................ 3,509 ----------- EXPENSES Investment advisory fee .......................................................... 15,326 Financial agent fee .............................................................. 23,540 Custodian ........................................................................ 19,714 Professional ..................................................................... 17,156 Printing ......................................................................... 4,331 Trustees ......................................................................... 3,455 Miscellaneous .................................................................... 3,309 ----------- Total expenses ................................................................. 86,831 Less expenses borne by investment adviser ...................................... (62,077) Custodian fees paid indirectly ................................................. (1) ----------- Net expenses ................................................................... 24,753 ----------- NET INVESTMENT LOSS ................................................................ (21,244) ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................. (601,649) Net realized loss on futures contracts ........................................... (63,310) Net change in unrealized appreciation (depreciation) on investments .............. (2,825,567) ----------- NET LOSS ON INVESTMENTS ............................................................ (3,490,526) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $(3,511,770) ===========
See Notes to Financial Statements 24 PHOENIX-DEUTSCHE NASDAQ-100 INDEX(R) SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ----------- ----------- FROM OPERATIONS Net investment income (loss) ................................................................... $ (21,244) $ (28,138) Net realized gain (loss) ....................................................................... (664,959) (2,415,397) Net change in unrealized appreciation (depreciation) ........................................... (2,825,567) (447,931) ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................ (3,511,770) (2,891,466) =========== =========== FROM SHARE TRANSACTIONS Proceeds from sales of shares (978,308 and 2,226,105 shares, respectively) ..................... 3,590,006 10,796,048 Cost of shares repurchased (511,990 and 899,721 shares, respectively) .......................... (1,899,995) (4,112,309) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ...................................... 1,690,011 6,683,739 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS .......................................................... (1,821,759) 3,792,273 NET ASSETS Beginning of period ............................................................................ 9,307,170 5,514,897 ----------- ----------- END OF PERIOD (INCLUDING ACCUMULATED NET INVESTMENT LOSS OF ($21,244) AND $0, RESPECTIVELY) .... $ 7,485,411 $ 9,307,170 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED FROM INCEPTION 6/30/02 YEAR ENDED 8/15/00 TO (UNAUDITED) 12/31/01 12/31/00 ----------- ---------- -------------- Net asset value, beginning of period .................... $ 4.23 $ 6.32 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .......................... (0.01) (0.02)(5) (0.01) Net realized and unrealized gain (loss) ............... (1.41) (2.07) (3.67) ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .................... (1.42) (2.09) (3.68) ------ ------ ------ CHANGE IN NET ASSET VALUE ............................... (1.42) (2.09) (3.68) ------ ------ ------ NET ASSET VALUE, END OF PERIOD .......................... $ 2.81 $ 4.23 $ 6.32 ====== ====== ====== Total return ............................................ (33.64)%(2) (33.04)% (36.78)%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ................... $7,485 $9,307 $5,515 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ................................ 0.57%(1)(4) 0.50%(4) 0.50%(1) Net investment income (loss) .......................... (0.49)%(1) (0.40)% (0.30)%(1) Portfolio turnover ...................................... 17%(2) 91% 50%(2) (1) Annualized. (2) Not annualized. (3) Ifthe investment advisor had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.98%, 2.35% and 3.93% for the periods ended June 30, 2002, December 31, 2001 and 2000, respectively. (4) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (5) Computed using average shares outstanding.
See Notes to Financial Statements 25 PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE -------- ----------- COMMON STOCKS--95.3% REAL ESTATE INVESTMENT TRUSTS--95.3% DIVERSIFIED--10.1% Colonial Properties Trust ............................ 21,000 $ 817,950 iStar Financial, Inc. ................................ 48,650 1,386,525 Vornado Realty Trust ................................. 72,000 3,326,400 ----------- 5,530,875 ----------- HEALTH CARE--4.3% Health Care Property Investors, Inc. ................. 27,300 1,171,170 Healthcare Realty Trust, Inc. ........................ 36,400 1,164,800 ----------- 2,335,970 ----------- INDUSTRIAL/OFFICE--24.3% INDUSTRIAL--9.9% CenterPoint Properties Corp. ......................... 47,400 2,749,674 First Industrial Realty Trust, Inc. .................. 22,300 732,555 ProLogis Trust ....................................... 75,200 1,955,200 ----------- 5,437,429 ----------- MIXED--3.3% Duke Realty Corp. .................................... 33,000 955,350 Reckson Associates Realty Corp. ...................... 28,025 697,822 Reckson Associates Realty Corp. Class B .............. 6,500 165,750 ----------- 1,818,922 ----------- OFFICE--11.1% Alexandria Real Estate Equities, Inc. ................ 10,000 493,400 Boston Properties, Inc. .............................. 55,000 2,197,250 Corporate Office Properties Trust .................... 17,758 259,089 Equity Office Properties Trust ....................... 50,500 1,520,050 SL Green Realty Corp. ................................ 44,750 1,595,338 ----------- 6,065,127 ----------- TOTAL INDUSTRIAL/OFFICE ........................................... 13,321,478 ----------- LODGING/RESORTS--2.7% Hospitality Properties Trust ......................... 39,800 1,452,700 ----------- RESIDENTIAL--14.5% APARTMENTS--14.5% Apartment Investment & Management Co. Class A ........ 31,000 1,525,200 Archstone-Smith Trust ................................ 32,000 854,400 Avalonbay Communities, Inc. .......................... 10,000 467,000 Camden Property Trust ................................ 28,600 1,059,058 Equity Residential Properties Trust .................. 49,400 1,420,250 Essex Property Trust, Inc. ........................... 14,600 798,620 United Dominion Realty Trust, Inc. ................... 116,000 1,827,000 ----------- 7,951,528 ----------- RETAIL--34.3% FREE STANDING--1.4% Realty Income Corp. .................................. 20,900 771,628 ----------- SHARES VALUE -------- ----------- REGIONAL MALLS--17.0% CBL & Associates Properties, Inc. .................... 66,400 $ 2,689,200 General Growth Properties, Inc. ...................... 52,050 2,654,550 Macerich Co. (The) ................................... 31,000 961,000 Simon Property Group, Inc. ........................... 69,650 2,565,906 Taubman Centers, Inc. ................................ 27,000 411,750 ----------- 9,282,406 ----------- SHOPPING CENTERS--15.9% Chelsea Property Group, Inc. ......................... 93,400 3,124,230 Developers Diversified Realty Corp. .................. 73,027 1,643,108 Kimco Realty Corp. ................................... 11,000 368,390 Pan Pacific Retail Properties, Inc. .................. 56,500 1,931,170 Weingarten Realty Investors .......................... 46,500 1,646,100 ----------- 8,712,998 ----------- TOTAL RETAIL ...................................................... 18,767,032 ----------- SELF STORAGE--5.1% Public Storage, Inc. ................................. 47,500 1,762,250 Shurgard Storage Centers, Inc. ....................... 29,836 1,035,309 ----------- 2,797,559 ----------- TOTAL REAL ESTATE INVESTMENT TRUSTS (Identified cost $42,679,350) ................................... 52,157,142 ----------- REAL ESTATE OPERATING COMPANIES--0.0% DIVERSIFIED--0.0% Vornado Operating, Inc. (b) .......................... 3,110 2,643 ----------- TOTAL REAL ESTATE OPERATING COMPANIES (Identified cost $24,880) ....................................... 2,643 ----------- TOTAL LONG-TERM INVESTMENTS--95.3% (Identified cost $42,704,230) ................................... 52,159,785 ----------- STANDARD PAR & POOR'S VALUE RATING (000) -------- ------ SHORT-TERM OBLIGATIONS--4.8% COMMERCIAL PAPER--2.6% Receivables Capital Corp. 1.90%, 7/1/02 .... A-1+ $1,405 1,405,000 ----------- FEDERAL AGENCY SECURITIES--2.2% Fannie Mae Discount Note 1.80%, 7/3/02 ..... AAA 1,215 1,214,879 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $2,619,879) .................................... 2,619,879 ----------- TOTAL INVESTMENTS--100.1% (Identified cost $45,324,109) ................................... 54,779,664(a) Other Assets and Liabilities, net--(0.1)% ....................... (78,129) ----------- NET ASSETS--100.0% ................................................ $54,701,535 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $9,448,608 and gross depreciation of $171,109 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $45,502,165. (b) Non income producing.
See Notes to Financial Statements 26 PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $45,324,109) ....................... $54,779,664 Cash ............................................................................... 1,198 Receivables Fund shares sold ................................................................. 133,545 Dividends and interest ........................................................... 276,073 ----------- Total assets ................................................................... 55,190,480 ----------- LIABILITIES Payables Investment securities purchased .................................................. 359,320 Fund shares repurchased .......................................................... 30,181 Printing fee ..................................................................... 38,251 Investment advisory fee .......................................................... 32,066 Professional fee ................................................................. 16,781 Financial agent fee .............................................................. 6,710 Trustees' fee .................................................................... 3,717 Accrued expenses ................................................................... 1,919 ----------- Total liabilities .............................................................. 488,945 ----------- NET ASSETS ......................................................................... $54,701,535 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $45,344,674 Undistributed net investment income .............................................. 271,946 Accumulated net realized loss .................................................... (370,640) Net unrealized appreciation ...................................................... 9,455,555 ----------- NET ASSETS ......................................................................... $54,701,535 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 3,069,849 =========== Net asset value and offering price per share ....................................... $17.82 ======
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ....................................................................... $1,337,025 Interest ........................................................................ 17,543 ---------- Total investment income ....................................................... 1,354,568 ---------- EXPENSES Investment advisory fee ......................................................... 170,503 Financial agent fee ............................................................. 38,565 Professional .................................................................... 15,390 Printing ........................................................................ 10,928 Custodian ....................................................................... 4,056 Trustees ........................................................................ 3,455 Miscellaneous ................................................................... 3,738 ---------- Total expenses ................................................................ 246,635 Less expenses borne by investment adviser ..................................... (4,683) Custodian fees paid indirectly ................................................ (74) ---------- Net expenses .................................................................. 241,878 ---------- NET INVESTMENT INCOME ............................................................. 1,112,690 ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities ................................................. 464,851 Net change in unrealized appreciation (depreciation) on investments ............. 5,255,964 ---------- NET GAIN ON INVESTMENTS ........................................................... 5,720,815 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .............................. $6,833,505 ==========
See Notes to Financial Statements 27 PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ----------- ------------ FROM OPERATIONS Net investment income (loss) ................................................................... $ 1,112,690 $ 1,567,084 Net realized gain (loss) ....................................................................... 464,851 2,031,162 Net change in unrealized appreciation (depreciation) ........................................... 5,255,964 (1,112,927) ----------- ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................................... 6,833,505 2,485,319 ----------- ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income .......................................................................... (1,021,815) (1,533,702) ----------- ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ...................................... (1,021,815) (1,533,702) ----------- ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (882,220 and 1,026,938 shares, respectively) ..................... 14,858,860 15,777,923 Net asset value of shares issued from reinvestment of distributions (59,194 and 100,085 shares, respectively) ................................................................................ 1,021,815 1,533,702 Cost of shares repurchased (515,294 and 754,210 shares, respectively) .......................... (8,496,949) (11,571,856) ----------- ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ...................................... 7,383,726 5,739,769 ----------- ------------ NET INCREASE (DECREASE) IN NET ASSETS .......................................................... 13,195,416 6,691,386 NET ASSETS Beginning of period ............................................................................ 41,506,119 34,814,733 ----------- ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $271,946 AND $181,071, RESPECTIVELY) ................................................................................ $54,701,535 $ 41,506,119 =========== ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, 6/30/02 ----------------------------------------------- (UNAUDITED) 2001 2000 1999 1998 1997 ----------- ------ ------ ------ ------ ------ Net asset value, beginning of period $15.70 $15.33 $12.21 $12.28 $16.38 $14.32 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) 0.38 0.62 0.63 0.65 0.78 0.50 Net realized and unrealized gain (loss) 2.10 0.37 3.07 (0.09) (4.20) 2.62 ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 2.48 0.99 3.70 0.56 (3.42) 3.12 ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income (0.36) (0.62) (0.58) (0.63) (0.65) (0.48) Distributions from net realized gains -- -- -- -- (0.02) (0.58) Tax return of capital -- -- -- -- (0.01) -- ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (0.36) (0.62) (0.58) (0.63) (0.68) (1.06) ------ ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE 2.12 0.37 3.12 (0.07) (4.10) 2.06 ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $17.82 $15.70 $15.33 $12.21 $12.28 $16.38 ====== ====== ====== ====== ====== ====== Total return 15.89%(4) 6.62% 30.78% 4.78% (21.19)% 22.05% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $54,702 $41,506 $34,815 $27,350 $36,408 $54,659 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) 1.06%(2)(3) 1.00%(2) 1.00% 1.00% 1.00% 1.00% Net investment income 4.89%(3) 4.21% 4.63% 5.06% 5.07% 3.59% Portfolio turnover 10%(4) 37% 26% 28% 18% 41% (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.08%, 1.16%, 1.32%, 1.31%, 1.01 % and 1.07% for the periods ended June 30, 2002, December 31, 2001, 2000, 1999, 1998 and 1997, respectively. (2) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (3) Annualized. (4) Not annualized.
See Notes to Financial Statements 28 PHOENIX-ENGEMANN CAPITAL GROWTH SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE --------- ------------ COMMON STOCKS--96.4% AIR FREIGHT & COURIERS--3.5% United Parcel Service, Inc. Class B ..................... 389,100 $ 24,026,925 ------------ BIOTECHNOLOGY--4.7% Amgen, Inc. (b) ......................................... 463,600 19,415,568 Genentech, Inc. (b) ..................................... 389,290 13,041,215 ------------ 32,456,783 ------------ BROADCASTING & CABLE TV--2.0% Univision Communications, Inc. Class A (b) .............. 446,450 14,018,530 ------------ COMPUTER HARDWARE--2.0% Dell Computer Corp. (b) ................................. 527,000 13,775,780 ------------ CONSUMER FINANCE--4.6% Household International, Inc. ........................... 308,000 15,307,600 MBNA Corp. .............................................. 504,000 16,667,280 ------------ 31,974,880 ------------ DATA PROCESSING SERVICES--6.2% Automatic Data Processing, Inc. ......................... 617,500 26,892,125 First Data Corp. ........................................ 433,200 16,115,040 ------------ 43,007,165 ------------ DIVERSIFIED FINANCIAL SERVICES--15.7% American Express Co. .................................... 881,310 32,009,179 Citigroup, Inc. ......................................... 392,832 15,222,240 Freddie Mac ............................................. 289,900 17,741,880 SLM Corp. ............................................... 214,800 20,814,120 State Street Corp. ...................................... 518,000 23,154,600 ------------ 108,942,019 ------------ DRUG RETAIL--2.5% Walgreen Co. ............................................ 440,700 17,024,241 ------------ FOOD DISTRIBUTORS--2.3% Sysco Corp. ............................................. 578,000 15,733,160 ------------ GENERAL MERCHANDISE STORES--8.0% Costco Wholesale Corp. (b) .............................. 353,900 13,667,618 Target Corp. ............................................ 525,000 20,002,500 Wal-Mart Stores, Inc. ................................... 391,250 21,522,662 ------------ 55,192,780 ------------ HEALTH CARE EQUIPMENT--6.1% Medtronic, Inc. ......................................... 982,920 42,118,122 ------------ HOME IMPROVEMENT RETAIL--4.1% Lowe's Cos., Inc. ....................................... 628,900 28,552,060 ------------ HOUSEHOLD PRODUCTS--2.7% Colgate-Palmolive Co. ................................... 371,900 18,613,595 ------------ MOVIES & ENTERTAINMENT--4.4% Fox Entertainment Group, Inc. Class A (b) ............... 900,300 19,581,525 Viacom, Inc. Class B (b) ................................ 245,079 10,874,155 ------------ 30,455,680 ------------ NETWORKING EQUIPMENT--3.6% Cisco Systems, Inc. (b) ................................. 1,802,520 25,145,154 ------------ SHARES VALUE --------- ------------ PHARMACEUTICALS--10.3% Johnson & Johnson ....................................... 359,520 $ 18,788,515 Lilly (Eli) & Co. ....................................... 127,500 7,191,000 Pfizer, Inc. ............................................ 1,095,807 38,353,245 Pharmacia Corp. ......................................... 188,730 7,067,939 ------------ 71,400,699 ------------ SEMICONDUCTORS--6.3% Intel Corp. ............................................. 950,030 17,357,048 Texas Instruments, Inc. ................................. 859,620 20,372,994 Xilinx, Inc. (b) ........................................ 277,220 6,218,045 ------------ 43,948,087 ------------ SOFT DRINKS--2.8% PepsiCo, Inc. ........................................... 407,000 19,617,400 ------------ SYSTEMS SOFTWARE--4.6% Microsoft Corp. (b) ..................................... 293,000 16,027,100 Oracle Corp. (b) ........................................ 1,630,270 15,438,657 VERITAS Software Corp. (b) .............................. 8,570 169,600 ------------ 31,635,357 ------------ TOTAL COMMON STOCKS (Identified cost $695,728,062) ....................................... 667,638,417 ------------ TOTAL LONG TERM INVESTMENTS--96.4% (Identified cost $695,728,062) ....................................... 667,638,417 ------------ STANDARD PAR & POOR'S VALUE RATING (000) -------- ------ SHORT-TERM OBLIGATIONS--2.8% COMMERCIAL PAPER--1.7% ABSC Capital Corp. 1.81%, 7/8/02 ............... A-1+ $ 390 389,824 ABSC Capital Corp. 1.83%, 7/8/02 ............... A-1+ 2,500 2,498,856 Executive Jet, Inc. 1.77%, 7/10/02 ............. A-1+ 1,115 1,114,397 ABSC Capital Corp. 1.80%, 7/12/02 .............. A-1+ 1,600 1,598,960 Donnelley (R.R.) & Sons 1.75%, 7/18/02 ......... A-1 2,965 2,962,261 Asset Securitization Corp. 1.80%, 7/25/02 ...... A-1+ 1,000 998,679 Verizon Network Funding Corp. 1.80%, 7/31/02 ...................................... A-1+ 1,300 1,297,811 Bavaria Universal Funding Corp. 1.82%, 8/12/02 ...................................... A-1 1,035 1,032,786 ------------ 11,893,574 ------------ FEDERAL AGENCY SECURITIES--0.3% Freddie Mac Discount Note 1.725%, 7/11/02 ...................................... AAA 1,900 1,898,907 ------------ MEDIUM TERM NOTES--0.8% Salomon Smith Barney Holdings 6.125%, 1/15/03 ...................................... AA- 1,492 1,523,540 Merrill Lynch & Co., Inc. 2.17%, 1/21/03 (c) ... AA- 3,000 3,001,542 Bank of America Corp. 10%, 2/1/03 .............. A 1,015 1,060,757 ------------ 5,585,839 ------------ TOTAL SHORT-TERM OBLIGATIONS (Identified cost $19,379,407) ........................................ 19,378,320 ------------ TOTAL INVESTMENTS--99.2% (Identified cost $715,107,469) ....................................... 687,016,737(a) Other assets and liabilities, net--0.8% .............................. 5,328,937 ------------ NET ASSETS--100.0% ..................................................... $692,345,674 ============ (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $54,582,282 and gross depreciation of $82,673,014 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $715,107,469. (b) Non-income producing. (c) Variable or step coupon security; interest rate shown reflects the rate currently in effect.
See Notes to Financial Statements 29 PHOENIX-ENGEMANN CAPITAL GROWTH SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $715,107,469) ...................... $ 687,016,737 Cash ............................................................................... 3,805 Receivables Investment securities sold ....................................................... 11,223,116 Dividends and interest ........................................................... 395,288 Fund shares sold ................................................................. 122,816 Prepaid expenses ................................................................... 290 -------------- Total assets ................................................................... 698,762,052 -------------- LIABILITIES Payables Investment securities purchased .................................................. 4,451,693 Fund shares repurchased .......................................................... 1,040,515 Printing fee ..................................................................... 402,434 Investment advisory fee .......................................................... 389,054 Financial agent fee .............................................................. 33,415 Trustees' fee .................................................................... 4,224 Accrued expenses ................................................................... 95,043 -------------- Total liabilities .............................................................. 6,416,378 -------------- NET ASSETS ......................................................................... $ 692,345,674 ============== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $1,028,855,075 Undistributed net investment income .............................................. 99,640 Accumulated net realized loss .................................................... (308,518,309) Net unrealized depreciation ...................................................... (28,090,732) -------------- NET ASSETS ......................................................................... $ 692,345,674 ============== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 59,795,395 ============== Net asset value and offering price per share ....................................... $11.58 ======
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ........................................................................ $ 2,932,267 Interest ......................................................................... 306,777 Foreign taxes withheld ........................................................... (443) ------------- Total investment income ........................................................ 3,238,601 ------------- EXPENSES Investment advisory fee .......................................................... 2,681,542 Financial agent fee .............................................................. 204,977 Printing ......................................................................... 112,902 Custodian ........................................................................ 93,148 Professional ..................................................................... 15,636 Trustees ......................................................................... 3,495 Miscellaneous .................................................................... 27,563 ------------- Total expenses ................................................................. 3,139,263 Custodian fees paid indirectly ................................................. (302) ------------- Net expenses ................................................................... 3,138,961 ------------- NET INVESTMENT INCOME .............................................................. 99,640 ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................. (26,748,983) Net change in unrealized appreciation (depreciation) on investments .............. (150,228,857) ------------- NET LOSS ON INVESTMENTS ............................................................ (176,977,840) ------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $(176,878,200) =============
See Notes to Financial Statements 30 PHOENIX-ENGEMANN CAPITAL GROWTH SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ------------- -------------- FROM OPERATIONS Net investment income (loss) ............................................................... $ 99,640 $ 131,872 Net realized gain (loss) ................................................................... (26,748,983) (231,402,697) Net change in unrealized appreciation (depreciation) ....................................... (150,228,857) (332,528,295) ------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................ (176,878,200) (563,799,120) ------------- -------------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ...................................................................... -- (716,525) Net realized long-term gains ............................................................... -- (24,334,683) ------------- -------------- DECREASE IN NET ASSETS FROM DISTRIBUTION TO SHAREHOLDERS ................................... -- (25,051,208) ------------- -------------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (3,194,944 and 7,384,942 shares, respectively) ............... 42,989,035 123,103,730 Net asset value of shares issued in conjunction with Plan of Reorganization (2,949,789 shares) (See Note 8) .......................................................... 39,773,479 -- Net asset value of shares issued from reinvestment of distributions (0 and 1,481,978 shares, respectively) .................................................................... -- 25,051,208 Cost of shares repurchased (11,411,523 and 18,495,629 shares, respectively) ................ (151,107,477) (301,771,867) ------------- -------------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS .................................. (68,344,963) (153,616,929) ------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS ...................................................... (245,223,163) (742,467,257) NET ASSETS Beginning of period ........................................................................ 937,568,837 1,680,036,094 ------------- -------------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $99,640 AND $0, RESPECTIVELY) ............................................................................ $ 692,345,674 $ 937,568,837 ============= ==============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, 6/30/02 --------------------------------------------------------- (UNAUDITED) 2001(2) 2000 1999 1998 1997 ----------- -------- ------ ------ ------ ------ Net asset value, beginning of period ................. $14.41 $22.49 $28.57 $23.93 $19.16 $18.89 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ....................... --(1) --(1) --(1) 0.03 0.03 0.13 Net realized and unrealized gain (loss) ............ (2.83) (7.72) (4.91) 6.97 5.65 3.70 ------ ------ ------ ------ ------ ------ Total from investment operations ................. (2.83) (7.72) (4.91) 7.00 5.68 3.83 ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ............... -- (0.01) --(1) (0.06) (0.03) (0.13) Distributions from net realized gains .............. -- (0.35) (1.17) (2.31) (0.88) (3.43) ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS .............................. -- (0.36) (1.17) (2.37) (0.91) (3.56) ------ ------ ------ ------ ------ ------ Capital contribution from Adviser .................. -- -- -- 0.01 -- -- ------ ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ............................ (2.83) (8.08) (6.08) 4.64 4.77 0.27 ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ....................... $11.58 $14.41 $22.49 $28.57 $23.93 $19.16 ====== ====== ====== ====== ====== ====== Total return ......................................... (19.65)%(5) (34.57)% (17.77)% 29.67% 30.01% 21.07% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ................ $692,346 $937,569 $1,680,036 $2,269,090 $1,876,296 $1,505,568 RATIO TO AVERAGE NET ASSETS OF: Operating expenses ................................. 0.76%(3)(4) 0.72%(3) 0.68% 0.68% 0.69% 0.74% Net investment income .............................. 0.02%(4) 0.01% 0.03% 0.11% 0.15% 0.64% Portfolio turnover ................................... 86%(5) 58% 82% 106% 102% 284% (1) Amount is less than $0.01. (2) As required, effective January 1, 2001, the Fund adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. There was no effect to net investment income per share and net realized and unrealized gain (loss) per share and the ratio of net investment income to average net assets. Per share ratios and supplemental data from prior periods have not been restated to reflect this change. (3) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (4) Annualized. (5) Not annualized.
See Notes to Financial Statements 31 PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE -------- ----------- COMMON STOCKS--92.9% ADVERTISING--0.3% DoubleClick, Inc. (b) ................................ 4,300 $ 31,906 ----------- AEROSPACE & DEFENSE--0.6% United Defense Industries, Inc. (b) .................. 3,010 69,230 ----------- AIR FREIGHT & COURIERS--1.6% Expeditors International of Washington, Inc. ......... 5,170 171,437 ----------- ALTERNATIVE CARRIERS--0.8% Commonwealth Telephone Enterprises, Inc. (b) ......... 2,075 83,498 ----------- APPAREL RETAIL--2.4% AnnTaylor Stores Corp. (b) ........................... 6,450 163,765 Charlotte Russe Holding, Inc. (b) .................... 4,400 98,252 ----------- 262,017 ----------- APPLICATION SOFTWARE--1.0% OPNET Technologies, Inc. (b) ......................... 5,980 53,581 Verisity Ltd. (b) .................................... 3,500 60,690 ----------- 114,271 ----------- BANKS--0.6% Investors Financial Services Corp. ................... 1,950 65,403 ----------- BIOTECHNOLOGY--10.4% Abgenix, Inc. (b) .................................... 6,300 61,740 Affymetrix, Inc. (b) ................................. 4,230 101,478 CuraGen Corp. (b) .................................... 3,505 19,313 CV Therapeutics, Inc. (b) ............................ 500 9,310 Enzon, Inc. (b) ...................................... 5 123 ICOS Corp. (b) ....................................... 1,700 28,832 IDEC Pharmaceuticals Corp. (b) ....................... 9,585 339,788 ImmunoGen, Inc. (b) .................................. 4,800 12,912 InterMune, Inc. (b) .................................. 1,000 21,100 Medicines Co. (The) (b) .............................. 9,010 111,093 MedImmune, Inc. (b) .................................. 2,812 74,237 Myriad Genetics, Inc. (b) ............................ 1,345 27,357 NPS Pharmaceuticals, Inc. (b) ........................ 5,945 91,077 Sepracor, Inc. (b) ................................... 15,700 149,935 Tanox, Inc. (b) ...................................... 7,600 82,308 ----------- 1,130,603 ----------- COMPUTER & ELECTRONICS RETAIL--0.9% Good Guys, Inc. (b) .................................. 28,390 100,217 ----------- COMPUTER STORAGE & PERIPHERALS--0.0% Procom Technology, Inc. (b) .......................... 3,200 1,696 ----------- CONSUMER FINANCE--2.9% Federal Agricultural Mortgage Corp. Class C (b) ...... 8,835 235,894 Metris Cos., Inc. .................................... 9,360 77,782 ----------- 313,676 ----------- DIVERSIFIED COMMERCIAL SERVICES--5.4% Corporate Executive Board Co. (The) (b) .............. 12,210 418,192 Energy Exploration Technologies, Inc. (b) ............ 6,225 3,113 NCO Group, Inc. (b) .................................. 7,500 163,350 ----------- 584,655 ----------- DIVERSIFIED FINANCIAL SERVICES--8.1% Gabelli Asset Management, Inc. Class A (b) ........... 11,375 415,187 Stewart (W.P.) & Co. Ltd ............................. 8,330 212,582 Stilwell Financial, Inc. ............................. 14,370 261,534 ----------- 889,303 ----------- SHARES VALUE -------- ----------- DRUG RETAIL--1.5% Duane Reade, Inc. (b) ................................ 4,810 $ 163,781 ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS--0.2% SeaChange International, Inc. (b) .................... 2,700 23,706 ----------- EMPLOYMENT SERVICES--0.3% Medical Staffing Network Holdings, Inc. (b) .......... 1,350 33,075 ----------- ENVIRONMENTAL SERVICES--1.5% Tetra Tech, Inc. (b) ................................. 11,362 167,021 ----------- FOOD RETAIL--2.8% Smart & Final, Inc. (b) .............................. 2,260 17,628 Whole Foods Market, Inc. (b) ......................... 6,098 294,046 ----------- 311,674 ----------- HEALTH CARE DISTRIBUTORS & SERVICES--4.1% Advisory Board Co. (The) (b) ......................... 1,970 71,393 Apria Healthcare Group, Inc. (b) ..................... 4,450 99,680 Omnicare, Inc. ....................................... 10,425 273,760 ----------- 444,833 ----------- HEALTH CARE EQUIPMENT--2.1% Inhale Therapeutic Systems, Inc. (b) ................. 16,870 167,519 SonoSite, Inc. (b) ................................... 4,150 59,885 ----------- 227,404 ----------- HEALTH CARE SUPPLIES--0.7% Edwards Lifesciences Corp. (b) ....................... 3,100 71,920 ----------- INTERNET SOFTWARE & SERVICES--4.8% BEA Systems, Inc. (b) ................................ 16,060 152,731 Overture Services, Inc. (b) .......................... 12,600 314,748 VeriSign, Inc. (b) ................................... 7,300 52,487 ----------- 519,966 ----------- IT CONSULTING & SERVICES--5.0% Edwards (J.D.) & Co. (b) ............................. 17,700 215,055 ManTech International Corp. (b) ...................... 8,350 200,316 SRA International, Inc. Class A (b) .................. 2,475 66,776 Veridian Corp. (b) ................................... 2,800 63,560 ----------- 545,707 ----------- NETWORKING EQUIPMENT--2.2% Black Box Corp. (b) .................................. 3,400 138,482 Finisar Corp. (b) .................................... 5,400 12,798 McDATA Corp. Class A (b) ............................. 7,100 62,551 McDATA Corp. Class B (b) ............................. 2,540 22,606 ----------- 236,437 ----------- OIL & GAS DRILLING--1.1% Grey Wolf, Inc. (b) .................................. 29,270 119,714 ----------- OIL & GAS EXPLORATION & PRODUCTION--5.8% ATP Oil & Gas Corp. (b) .............................. 19,050 57,721 Evergreen Resources, Inc. (b) ........................ 4,500 191,250 Forest Oil Corp. (b) ................................. 4,185 118,980 Houston Exploration Co. (The) (b) .................... 4,590 133,110 Ultra Petroleum Corp. (b) ............................ 18,000 136,620 ----------- 637,681 ----------- RESTAURANTS--6.0% Buca, Inc. (b) ....................................... 11,300 215,265 California Pizza Kitchen, Inc. (b) ................... 3,000 74,400 Cheesecake Factory, Inc. (The) (b) ................... 10,187 361,435 ----------- 651,100 -----------
See Notes to Financial Statements 32 PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH SERIES
SHARES VALUE -------- ----------- SEMICONDUCTOR EQUIPMENT--5.8% Axcelis Technologies, Inc. (b) ....................... 13,900 $ 157,070 Cymer, Inc. (b) ...................................... 6,380 223,555 Photronics, Inc. (b) ................................. 2,500 47,350 Rudolph Technologies, Inc. (b) ....................... 8,425 210,035 ----------- 638,010 ----------- SEMICONDUCTORS--5.4% Applied Micro Circuits Corp. (b) ..................... 18,980 89,776 Integrated Circuit Systems, Inc. (b) ................. 9,600 193,824 Intersil Corp. Class A (b) ........................... 3,651 78,058 Micrel, Inc. (b) ..................................... 10,755 154,657 Silicon Storage Technology, Inc. (b) ................. 8,740 68,172 ----------- 584,487 ----------- SPECIALTY STORES--4.8% Advance Auto Parts, Inc. (b) ......................... 1,350 73,589 Cost Plus, Inc. (b) .................................. 11,700 356,370 MarineMax, Inc. (b) .................................. 6,900 89,355 ----------- 519,314 ----------- SYSTEMS SOFTWARE--0.4% NYFIX, Inc. (b) ...................................... 5,770 49,045 ----------- TELECOMMUNICATIONS EQUIPMENT--1.4% Advanced Fibre Communications, Inc. (b) .............. 9,600 158,784 ----------- TRADING COMPANIES & DISTRIBUTORS--1.1% Fastenal Co. ......................................... 3,020 116,300 ----------- TRUCKING--0.9% Pacer International, Inc. (b) ........................ 5,700 98,268 ----------- TOTAL COMMON STOCKS (Identified cost $12,728,270) ................................... 10,136,139 ----------- FOREIGN COMMON STOCKS--1.6% APPLICATION SOFTWARE--1.0% Precise Software Solutions Ltd. (Israel) (b) ......... 12,095 115,507 ----------- OIL & GAS DRILLING--0.6% Precision Drilling Corp. (Canada) (b) ................ 1,815 63,053 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $309,275) ...................................... 178,560 ----------- TOTAL LONG TERM INVESTMENTS--94.5% (Identified cost $13,037,545) ................................... 10,314,699 ----------- STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ----- ----------- SHORT-TERM OBLIGATIONS--5.1% COMMERCIAL PAPER--5.1% Special Purpose Accounts Receivable Cooperative Corp. 2%, 7/1/02 ............. A-1 $300 $ 299,967 Wisconsin Electric Power Co. 1.87%, 7/1/02 ................................... A-1 145 144,985 Verizon Network Funding Corp. 1.80%, 7/16/02 .................................. A-1+ 110 109,906 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $554,917) ...................................... 554,858 ----------- TOTAL INVESTMENTS--99.6% (Identified Cost $13,592,462) ................................... 10,869,557(a) Other assets and liabilities, net--0.4% ......................... 41,216 ----------- NET ASSETS--100.0% ................................................ $10,910,773 =========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $1,060,525 and gross depreciation of $3,938,582 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $13,747,614. (b) Non-income producing.
See Notes to Financial Statements 33 PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $13,592,462) ....................... $10,869,557 Cash ............................................................................... 1,900 Receivables Investment securities sold ....................................................... 93,262 Fund shares sold ................................................................. 5,833 Receivable from adviser .......................................................... 568 ----------- Total assets ................................................................... 10,971,120 ----------- LIABILITIES Payables Fund shares repurchased .......................................................... 14,479 Professional fee ................................................................. 19,897 Printing ......................................................................... 13,816 Financial agent fee .............................................................. 4,241 Trustees' fee .................................................................... 3,717 Accrued expenses ................................................................... 4,197 ----------- Total liabilities .............................................................. 60,347 ----------- NET ASSETS ......................................................................... $10,910,773 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $18,422,398 Accumulated net investment loss .................................................. (61,052) Accumulated net realized loss .................................................... (4,727,668) Net unrealized depreciation ...................................................... (2,722,905) ----------- NET ASSETS ......................................................................... $10,910,773 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 2,330,429 =========== Net asset value and offering price per share ....................................... $4.68 =====
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ........................................................................ $ 8,896 Interest ......................................................................... 7,046 ----------- Total investment income ........................................................ 15,942 ----------- EXPENSES Investment advisory fee .......................................................... 57,012 Financial agent fee .............................................................. 25,430 Professional ..................................................................... 15,295 Custodian ........................................................................ 10,113 Trustees ......................................................................... 3,455 Printing ......................................................................... 3,187 Miscellaneous .................................................................... 3,440 ----------- Total expenses ................................................................. 117,932 Less expenses borne by investment adviser ...................................... (40,925) Custodian fees paid indirectly ................................................. (13) ----------- Net expenses ................................................................... 76,994 ----------- NET INVESTMENT LOSS ................................................................ (61,052) ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................. (2,157,175) Net change in unrealized appreciation (depreciation) on investments .............. (1,319,320) ----------- NET LOSS ON INVESTMENTS ............................................................ (3,476,495) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $(3,537,547) ===========
See Notes to Financial Statements 34 PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ------------- -------------- FROM OPERATIONS Net investment income (loss) ................................................................... $ (61,052) $ (57,227) Net realized gain (loss) ....................................................................... (2,157,175) (2,105,477) Net change in unrealized appreciation (depreciation) ........................................... (1,319,320) (577,313) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................................... (3,537,547) (2,740,017) ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income .......................................................................... -- (5,041) ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ...................................... -- (5,041) ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (855,843 and 2,084,130 shares, respectively) ..................... 4,856,800 13,577,158 Net asset value of shares issued from reinvestment of distributions (0 and 708 shares, respectively). ............................................................................... -- 5,041 Cost of shares repurchased (692,416 and 774,877 shares, respectively) .......................... (3,873,013) (4,642,204) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ...................................... 983,787 8,939,995 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS .......................................................... (2,553,760) 6,194,937 NET ASSETS Beginning of period ............................................................................ 13,464,533 7,269,596 ----------- ----------- END OF PERIOD (INCLUDING ACCUMULATED NET INVESTMENT LOSS OF ($61,052) AND $0, RESPECTIVELY) .... $10,910,773 $13,464,533 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED FROM INCEPTION 6/30/02 YEAR ENDED 8/15/00 TO (UNAUDITED) 12/31/01 12/31/00 ----------- ---------- -------------- Net asset value, beginning of period ............................................ $ 6.21 $ 8.48 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .................................................. (0.03) (0.04)(6) 0.01 Net realized and unrealized gain (loss) ....................................... (1.50) (2.23) (1.53) ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ............................................ (1.53) (2.27) (1.52) ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .......................................... -- --(4) -- ------ ------ ------ TOTAL DISTRIBUTIONS ......................................................... -- -- -- ------ ------ ------ CHANGE IN NET ASSET VALUE ....................................................... (1.53) (2.27) (1.52) ------ ------ ------ NET ASSET VALUE, END OF PERIOD .................................................. $ 4.68 $ 6.21 $ 8.48 ====== ====== ====== Total return .................................................................... (24.64)%(2) (26.72)% (15.18)%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ........................................... $10,911 $13,465 $7,270 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ........................................................ 1.22%(1)(5) 1.15%(5) 1.15%(1) Net investment income (loss) .................................................. (0.96)%(1) (0.55)% 0.21%(1) Portfolio turnover .............................................................. 38%(2) 31% 21%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.86%, 2.13% and 3.93% for the periods ended June 30, 2002, December 31, 2001 and 2000, respectively. (4) Amount is less than $0.01. (5) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (6) Computed using average shares outstanding.
See Notes to Financial Statements 35 PHOENIX-FEDERATED U.S. GOVERNMENT BOND SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------ ----------- U.S. GOVERNMENT SECURITIES--23.3% U.S. TREASURY BONDS--23.3% U.S. Treasury Bonds 11.25%, 2/15/15 ............ AAA $ 450 $ 699,117 U.S. Treasury Bonds 9.25%, 2/15/16 ............. AAA 400 549,700 U.S. Treasury Bonds 7.25%, 5/15/16 ............. AAA 500 589,278 U.S. Treasury Bonds 8.75%, 5/15/17 ............. AAA 400 533,707 U.S. Treasury Bonds 9.125%, 5/15/18 ............ AAA 400 552,844 U.S. Treasury Bonds 8.875%, 2/15/19 ............ AAA 400 544,051 ----------- TOTAL U.S. GOVERNMENT SECURITIES (Identified cost $3,166,390) .......................................... 3,468,697 ----------- AGENCY MORTGAGE-BACKED SECURITIES--17.6% GNMA 7%, 7/15/31 ............................... AAA 769 800,414 GNMA 6.50%, 7/20/31 ............................ AAA 887 903,067 GNMA 6.50%, 8/20/31 ............................ AAA 910 926,777 ----------- TOTAL AGENCY MORTGAGE-BACKED SECURITIES (Identified cost $2,594,770) .......................................... 2,630,258 ----------- AGENCY NON MORTGAGE-BACKED SECURITIES--51.3% Fannie Mae 6.625%, 11/15/30 .................... AAA 1,200 1,266,958 Federal Farm Credit Bank 5%, 2/3/03 ............ AAA 1,300 1,322,534 Federal Home Loan Bank 7.125%, 2/15/30 ......... AAA 1,100 1,232,037 Freddie Mac 6.75%, 9/15/29 ..................... AAA 72 76,650 Freddie Mac 6.25%, 7/15/32 ..................... AAA 2,713 2,727,637 Tennesse Valley Authority Series A 5.625%, 1/18/11 ...................................... AAA 1,000 1,015,548 ----------- TOTAL AGENCY NON MORTGAGE-BACKED SECURITIES (Identified cost $7,405,332) .......................................... 7,641,364 ----------- TOTAL LONG TERM INVESTMENTS--92.2% (Identified cost $13,166,492) ......................................... 13,740,319 ----------- PAR VALUE (000) VALUE ------ ----------- SHORT-TERM OBLIGATIONS--6.6% REPURCHASE AGREEMENTS--6.6% Greenwich Capital Markets, Inc. repurchase agreement 1.93% dated 6/28/02, due 7/1/02, repurchase price $983,158, collateralized by U.S. Treasury Notes 3.375% to 12.50%, 1/15/08 to 4/15/32, market value $1,260,089 .................................................. $ 983 $ 983,000 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $983,000) ............................................ 983,000 ----------- TOTAL INVESTMENTS--98.8% (Identified Cost $14,149,492) ......................................... 14,723,319(a) Other assets and liabilities, net--1.2% ............................... 181,039 ----------- NET ASSETS--100.0% ...................................................... $14,904,358 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $574,226 and gross depreciation of $19,510 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $14,168,603.
See Notes to Financial Statements 36 PHOENIX-FEDERATED U.S. GOVERNMENT BOND SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $14,149,492) ....................... $14,723,319 Cash ............................................................................... 696 Receivables Interest ......................................................................... 229,544 Fund shares sold ................................................................. 284 Receivable from adviser .......................................................... 484 ----------- Total assets ................................................................... 14,954,327 ----------- LIABILITIES Payables Fund shares repurchased .......................................................... 655 Professional fee ................................................................. 18,615 Printing fee ..................................................................... 17,045 Financial agent fee .............................................................. 4,378 Trustees' fee .................................................................... 3,436 Accrued expenses ................................................................... 5,840 ----------- Total liabilities .............................................................. 49,969 ----------- NET ASSETS ......................................................................... $14,904,358 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $14,329,860 Undistributed net investment income .............................................. 9,217 Accumulated net realized loss .................................................... (8,546) Net unrealized appreciation ...................................................... 573,827 ----------- NET ASSETS ......................................................................... $14,904,358 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 1,369,657 =========== Net asset value and offering price per share ....................................... $10.88 ======
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Interest ......................................................................... $429,799 -------- Total investment income ........................................................ 429,799 -------- EXPENSES Investment advisory fee .......................................................... 44,095 Financial agent fee .............................................................. 26,007 Professional ..................................................................... 15,460 Custodian ........................................................................ 6,269 Printing ......................................................................... 5,382 Trustees ......................................................................... 3,174 Miscellaneous .................................................................... 4,520 -------- Total expenses ................................................................. 104,907 Less expenses borne by investment adviser ...................................... (36,245) Custodian fees paid indirectly ................................................. (4,962) -------- Net expenses ................................................................... 63,700 -------- NET INVESTMENT INCOME .............................................................. 366,099 -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................. (4,508) Net change in unrealized appreciation (depreciation) on investments .............. 170,406 -------- NET GAIN ON INVESTMENTS ............................................................ 165,898 -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $531,997 ========
See Notes to Financial Statements 37 PHOENIX-FEDERATED U.S. GOVERNMENT BOND SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ------------- -------------- FROM OPERATIONS Net investment income (loss) ................................................................... $ 366,099 $ 738,518 Net realized gain (loss) ....................................................................... (4,508) 419,454 Net change in unrealized appreciation (depreciation) ........................................... 170,406 (445,334) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................................... 531,997 712,638 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income .......................................................................... (380,636) (722,631) Net realized short-term gains .................................................................. -- (96,049) Net realized long-term gains ................................................................... -- (314,062) ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ...................................... (380,636) (1,132,742) ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (65,852 and 549,808 shares, respectively) ........................ 717,510 6,131,265 Net asset value of shares issued from reinvestment of distributions (35,627 and 104,173 shares, respectively) .................................................... 380,636 1,132,742 Cost of shares repurchased (134,561 and 290,301 shares, respectively) .......................... (1,458,090) (3,243,311) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ...................................... (359,944) 4,020,696 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS .......................................................... (208,583) 3,600,592 NET ASSETS Beginning of period ............................................................................ 15,112,941 11,512,349 ----------- ----------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $9,217 AND $23,754, RESPECTIVELY) ................................................................................ $14,904,358 $15,112,941 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS YEAR ENDED ENDED DECEMBER 31, FROM INCEPTION 6/30/02 ------------------- 12/15/99 TO (UNAUDITED) 2001(6) 2000 12/31/99 ----------- ------- ------ -------------- Net asset value, beginning of period .................... $10.77 $11.08 $ 9.83 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .......................... 0.27 0.56(5) 0.56 0.03 Net realized and unrealized gain (loss) ............... 0.12 (0.02) 1.24 (0.17) ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .................... 0.39 0.54 1.80 (0.14) ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .................. (0.28) (0.54) (0.55) (0.03) Distributions from net realized gains ................. -- (0.31) --(7) -- ------ ------ ------ ------ TOTAL DISTRIBUTIONS ................................. (0.28) (0.85) (0.55) (0.03) ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ............................... 0.11 (0.31) 1.25 (0.17) ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD .......................... $10.88 $10.77 $11.08 $ 9.83 ------ ------ ------ ------ Total return ............................................ 3.64%(2) 5.01% 18.75% (1.47)%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ................... $14,904 $15,113 $11,512 $5,076 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ................................ 0.93%(1)(4) 0.84%(4) 0.75% 0.75%(1) Net investment income ................................. 4.98%(1) 4.98% 5.97% 6.61%(1) Portfolio turnover ...................................... 0%(2) 59% 1% 0%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.36%, 1.46%, 2.52% and 8.21% for the periods ended June 30, 2002, December 31, 2001, 2000 and 1999, respectively. (4) For the periods ended June 30, 2002 and December 31, 2001 the ratios of operating expenses to average net assets excludes the effect of expense offsets for custodian fees, if expense offsets were included, the ratios would have been 0.87% and 0.82%, respectively. (5) Computed using average shares outstanding. (6) As required, effective January 1, 2001, the Fund adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities and including paydown gains and losses in interest income. The effect of this change for the year ended December 31, 2001 was to decrease net investment income per share by $0.03, increase net realized and unrealized gains and losses per share by $0.03 and decrease the ratio of net investment income to average net assets from 5.24% to 4.98%. Per share ratios and supplemental data for prior periods have not been restated to reflect this change. (7) Amount is less than $0.01.
See Notes to Financial Statements 38
PHOENIX-GOODWIN MONEY MARKET SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED) FACE VALUE INTEREST MATURITY (000) DESCRIPTION RATE DATE VALUE - ------ ----------- -------- -------- ------------ FEDERAL AGENCY SECURITIES--13.3% $ 38 FFCB ................................................................. 1.75% 7/2/02 $ 37,998 670 FFCB ................................................................. 1.85 7/2/02 669,966 2,995 FHLB ................................................................. 1.73 7/11/02 2,993,565 6,050 FFCB ................................................................. 1.71 7/17/02 6,045,402 2,500 FHLB ................................................................. 6.88(c) 7/18/02 2,503,693 5,980 FHLB ................................................................. 1.70 7/24/02 5,973,505 3,500 FHLB ................................................................. 2.26(c) 8/3/02(d) 3,500,000 8,620 Fannie Mae ........................................................... 6.75 8/15/02 8,671,520 2,500 FHLB ................................................................. 2.75(c) 9/13/02(d) 2,500,000 ------------ TOTAL FEDERAL AGENCY SECURITIES ............................................................................... 32,895,649 ------------ RESET DATE ------- FEDERAL AGENCY SECURITIES--VARIABLE(b)--3.0% 111 SBA (Final Maturity 1/25/21) ......................................... 2.25 7/1/02 110,998 738 SBA (Final Maturity 10/25/22) ........................................ 2.25 7/1/02 738,386 1,984 SBA (Final Maturity 11/25/21) ........................................ 2.38 7/1/02 1,982,644 1,255 SBA (Final Maturity 2/25/23) ......................................... 2.25 7/1/02 1,255,416 505 SBA (Final Maturity 2/25/23) ......................................... 2.25 7/1/02 504,679 1,264 SBA (Final Maturity 3/25/24) ......................................... 2.13 7/1/02 1,263,594 168 SBA (Final Maturity 5/25/21) ......................................... 2.25 7/1/02 167,864 1,511 SBA (Final Maturity 9/25/23) ......................................... 2.13 7/1/02 1,510,875 ------------ TOTAL FEDERAL AGENCY SECURITIES--VARIABLE ..................................................................... 7,534,456 ------------ STANDARD & POOR'S MATURITY RATING DATE -------- -------- COMMERCIAL PAPER--55.9% 2,500 Donnelley (R.R.) & Sons .................................. A-1 1.78 7/1/02 2,500,000 5,000 Emerson Electric Co. ..................................... A-1 2.00 7/1/02 5,000,000 4,285 Wisconsin Electric Power Co. ............................. A-1 2.00 7/1/02 4,285,000 2,000 Bavaria Universal Funding Corp. .......................... A-1 1.80 7/2/02 1,999,900 1,785 Preferred Receivables Funding Corp. ...................... A-1 1.80 7/2/02 1,784,911 2,910 Receivables Capital Corp. ................................ A-1+ 1.80 7/2/02 2,909,854 250 Delaware Funding Corp. ................................... A-1+ 1.82 7/8/02 249,912 6,750 Pitney Bowes, Inc. ....................................... A-1+ 1.80 7/8/02 6,747,637 2,000 ABSC Capital Corp. ....................................... A-1+ 1.83 7/9/02 1,999,187 3,500 Enterprise Funding Corp. ................................. A-1+ 1.83 7/10/02 3,498,399 3,500 Executive Jet, Inc. ...................................... A-1+ 1.81 7/10/02 3,498,416 1,757 Enterprise Funding Corp. ................................. A-1+ 1.80 7/11/02 1,756,121 1,003 Enterprise Funding Corp. ................................. A-1+ 1.83 7/11/02 1,002,490 2,500 Harley-Davidson Funding Corp. ............................ A-1 1.76 7/11/02 2,498,778 340 Harley-Davidson Funding Corp. ............................ A-1 1.78 7/11/02 339,832 1,700 ABSC Capital Corp. ....................................... A-1+ 1.80 7/12/02 1,699,065 1,012 Pfizer, Inc. ............................................. A-1+ 1.80 7/12/02 1,011,443 735 Bavaria Universal Funding Corp. .......................... A-1 1.85 7/15/02 734,471 2,793 Delaware Funding Corp. ................................... A-1+ 1.82 7/15/02 2,791,023 2,330 Enterprise Funding Corp. ................................. A-1+ 1.80 7/15/02 2,328,369 3,500 Receivables Capital Corp. ................................ A-1+ 1.80 7/16/02 3,497,375 3,000 Delaware Funding Corp. ................................... A-1+ 1.79 7/18/02 2,997,464 2,500 Donnelley (R.R.) & Sons .................................. A-1 1.75 7/18/02 2,497,934 1,131 Receivables Capital Corp. ................................ A-1+ 1.81 7/19/02 1,129,976 3,500 Executive Jet, Inc. ...................................... A-1+ 1.80 7/22/02 3,496,325 3,500 SBC Communications, Inc. ................................. A-1+ 1.77 7/22/02 3,496,386 2,500 Pfizer, Inc. ............................................. A-1+ 1.75 7/23/02 2,497,326 3,500 Pfizer, Inc. ............................................. A-1+ 1.78 7/23/02 3,496,193 1,503 Park Avenue Receivables .................................. A-1 1.80 7/24/02 1,501,272 3,500 Asset Securitization Corp. ............................... A-1+ 1.80 7/25/02 3,495,800 5,000 Asset Securitization Corp. ............................... A-1+ 1.80 7/26/02 4,993,750 3,850 Park Avenue Receivables .................................. A-1 1.80 7/26/02 3,845,187 2,000 Executive Jet, Inc. ...................................... A-1+ 1.78 7/29/02 1,997,231 4,270 Exxon Imperial U.S., Inc. ................................ A-1+ 1.76 7/30/02 4,263,946
See Notes to Financial Statements 39
PHOENIX-GOODWIN MONEY MARKET SERIES FACE STANDARD VALUE & POOR'S INTEREST MATURITY (000) DESCRIPTION RATING RATE DATE VALUE - ------ ----------- -------- -------- -------- ------------ COMMERCIAL PAPER--CONTINUED $3,850 Preferred Receivables Funding Corp. ...................... A-1 1.80% 8/1/02 $ 3,844,033 3,000 Special Purpose Accounts Receivables Cooperative Corp. ... A-1 1.80 8/6/02 2,994,600 4,550 ABN-AMRO Bank ............................................ A-1+ 1.78 8/8/02 4,541,451 3,000 Bavaria Universal Funding Corp. .......................... A-1 1.82 8/12/02 2,993,630 2,310 Receivables Capital Corp. ................................ A-1+ 1.83 8/13/02 2,304,951 1,265 Enterprise Funding Corp .................................. A-1 1.80 8/16/02 1,262,091 2,500 Beta Finance, Inc. ....................................... A-1+ 1.95 8/19/02 2,493,365 2,879 ABSC Capital Corp. ....................................... A-1+ 1.85 8/20/02 2,871,603 2,017 Receivables Capital Corp. ................................ A-1+ 1.80 8/21/02 2,011,857 3,500 Special Purpose Accounts Receivables Cooperative Corp. ... A-1 1.83 8/27/02 3,489,859 4,298 Bavaria Universal Funding Corp. .......................... A-1 1.82 9/5/02 4,283,659 3,710 ABSC Capital Corp. ....................................... A-1+ 1.85 9/9/02 3,696,654 2,500 Marsh & McLennan Co., Inc. ............................... A-1+ 1.83 9/10/02 2,490,977 5,000 Private Export Fund Corp. ................................ A-1+ 2.15 9/25/02 4,974,319 2,500 Cxc LLC .................................................. A-1+ 1.88 12/16/02 2,478,067 ------------ TOTAL COMMERCIAL PAPER 138,572,089 ------------ MEDIUM TERM NOTES(c)--18.6% 1,500 Associates Corp. ......................................... AA- 6.50 7/15/02 1,501,405 2,490 Bank of America Corp. .................................... A 7.75 7/15/02 2,495,571 1,700 Associates Corp. ......................................... AA- 6.50 8/15/02 1,709,491 650 Du Pont (E.I.) de Nemours & Co. .......................... AA- 6.50 9/1/02 654,116 3,125 General Electric Capital Corp. ........................... AAA 6.52 10/8/02 3,162,166 725 Associates Corp. ......................................... AA- 6.38 10/15/02 732,988 391 Associates Corp. ......................................... AA- 6.50 10/15/02 395,294 3,875 Bank of America Corp. .................................... A 7.50 10/15/02 3,933,598 375 Du Pont (E.I.) de Nemours & Co. .......................... AA- 6.75 10/15/02 379,980 2,500 General Electric Capital Corp. ........................... AAA 5.35 11/18/02 2,527,893 428 Bank of America Corp. .................................... A 7.88 12/1/02 437,834 2,500 3M Co. 144A (b),(f) ...................................... AA 5.65 12/12/02(d) 2,535,586 2,152 Citifinancial ............................................ AA- 5.88 1/15/03 2,190,958 2,125 Heller Financial, Inc. ................................... AAA 6.40 1/15/03 2,164,803 2,000 Salomon Smith Barney Holdings ............................ AA- 6.13 1/15/03 2,043,663 1,500 Associates Corp. ......................................... AA- 6.88 2/1/03 1,538,633 2,625 Bank of America Corp. .................................... A 10.00 2/1/03 2,737,722 2,150 General Electric Capital Corp. ........................... AAA 7.00 2/3/03 2,211,264 3,255 Pitney Bowes Credit Corp. ................................ AA 8.80 2/15/03 3,379,845 1,500 Du Pont (E.I.) de Nemours & Co.(b) ....................... AA- 6.00 3/6/03(d) 1,532,544 2,500 Wal Mart Stores, Inc. .................................... AA 4.63 4/15/03 2,542,286 2,921 BellSouth Telecommunications Corp. ....................... AA 6.25 5/15/03 3,010,864 240 General Electric Capital Corp. ........................... AAA 5.88 5/19/03 246,406 2,150 Bank of America Corp. .................................... A 6.88 6/1/03 2,237,835 ------------ TOTAL MEDIUM TERM NOTES ....................................................................................... 46,302,745 ------------ VARIABLE MONEY MARKET CERTIFICATES(b)--5.6% 1,820 Citicorp ................................................. AA- 2.01 8/13/02 1,817,961 3,500 Beta Finance, Inc. ....................................... AAA 1.84 1/15/03 3,499,824 3,500 Merrill Lynch & Co., Inc. ................................ AA- 2.17 1/21/03 3,502,750 2,500 Merrill Lynch & Co., Inc. ................................ AA- 1.82 3/5/03 2,500,000 2,500 Merrill Lynch & Co., Inc. ................................ AA- 1.82 5/2/03 2,500,000 ------------ TOTAL VARIABLE MONEY MARKET CERTIFICATES ...................................................................... 13,820,535 ------------ CERTIFICATES OF DEPOSIT--1.4% 3,365 Canadian Imperial Bank of Commerce (b),(e) ............... AA- 1.82(c) 8/1/02 3,365,000 ------------ TOTAL CERTIFICATES OF DEPOSIT ................................................................................. 3,365,000 ------------ TOTAL INVESTMENTS--97.8% (Identified cost $242,490,474) .............................................................................. 242,490,474(a) Other assets and liabilities, net--2.2% ....................................................................... 5,427,405 ------------ NET ASSETS--100% .............................................................................................. $247,917,879 ============ (a) Federal Income Tax Information: At June 30, 2002, the aggregate cost of securities was the same for book and tax purposes. (b) Variable or step coupon security; interest rate shown reflects the rate currently in effect. (c) The interest rate shown is the coupon rate. (d) Callable. The maturity date shown is the call date. (e) Yankee CD. (f) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2002, these securities amounted to a value of $2,535,586 or 1.0% of net assets.
See Notes to Financial Statements 40 PHOENIX-GOODWIN MONEY MARKET SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $242,490,474) ...................... $242,490,474 Cash ............................................................................... 2,977 Receivables Fund shares sold ................................................................. 6,081,234 Interest ......................................................................... 1,455,370 Investment securities sold ....................................................... 125,584 ------------ Total assets ................................................................... 250,155,639 ------------ LIABILITIES Payables Fund shares repurchased .......................................................... 1,964,891 Printing fee ..................................................................... 150,518 Investment advisory fee .......................................................... 78,744 Financial agent fee .............................................................. 18,853 Trustees' fee .................................................................... 3,717 Accrued expenses ................................................................... 21,037 ------------ Total liabilities .............................................................. 2,237,760 ------------ NET ASSETS ......................................................................... $247,917,879 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $247,917,879 ------------ NET ASSETS ......................................................................... $247,917,879 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 24,791,811 ============ Net asset value and offering price per share ....................................... $10.00 ======
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Interest ......................................................................... $2,555,285 ---------- Total investment income ........................................................ 2,555,285 ---------- EXPENSES Investment advisory fee .......................................................... 488,221 Financial agent fee .............................................................. 113,289 Printing ......................................................................... 31,047 Custodian ........................................................................ 21,166 Professional ..................................................................... 15,317 Trustees ......................................................................... 3,455 Miscellaneous .................................................................... 7,968 ---------- Total expenses ................................................................. 680,463 Custodian fees paid indirectly ................................................. (932) ---------- Net expenses ................................................................... 679,531 ---------- NET INVESTMENT INCOME .............................................................. $1,875,754 ==========
See Notes to Financial Statements 41 PHOENIX-GOODWIN MONEY MARKET SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ------------- -------------- FROM OPERATIONS Net investment income (loss) ................................................................ $ 1,875,754 $ 7,565,972 Net realized gain (loss) .................................................................... -- 898 ------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................. 1,875,754 7,566,870 ------------- -------------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ....................................................................... (1,875,754) (7,565,972) Net realized short-term gains ............................................................... -- (898) ------------- -------------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ................................... (1,875,754) (7,566,870) ------------- -------------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (36,501,925 and 101,934,992 shares, respectively) ............. 365,019,258 1,019,349,924 Net asset value of shares issued from reinvestment of distributions (187,575 and 756,687 shares, respectively) ................................................ 1,875,754 7,566,870 Cost of shares repurchased (37,960,587 and 94,625,616 shares, respectively) ................. (379,605,876) (946,256,175) ------------- -------------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................... (12,710,864) 80,660,619 ------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS ....................................................... (12,710,864) 80,660,619 NET ASSETS Beginning of period ......................................................................... 260,628,743 179,968,124 ------------- -------------- END OF PERIOD ............................................................................... $ 247,917,879 $ 260,628,743 ============= ==============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, 6/30/02 ------------------------------------------------- (UNAUDITED) 2001 2000 1999 1998 1997 ----------- ------- ------ ------ ------ ------ Net asset value, beginning of period ................. $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ....................... 0.08 0.38 0.59 0.47 0.50 0.50 Net realized gain .................................. -- --(3) -- -- -- -- ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ................. 0.08 0.38 0.59 0.47 0.50 0.50 ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ............... (0.08) (0.38) (0.59) (0.47) (0.50) (0.50) Distributions from net realized gains .............. -- --(3) -- -- -- -- ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS .............................. (0.08) (0.38) (0.59) (0.47) (0.50) (0.50) ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ....................... $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 ====== ====== ====== ====== ====== ====== Total return ......................................... 0.76%(5) 3.82% 6.03% 4.82% 5.09% 4.99% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ................ $247,918 $260,629 $179,968 $235,584 $196,811 $126,607 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (1) ............................. 0.56%(2)(4) 0.55%(2) 0.55% 0.55% 0.55% 0.55% Net investment income .............................. 1.53%(4) 3.63% 5.83% 4.73% 4.99% 5.07% (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.60%, 0.58% and 0.57% for the periods ended December 31, 2001, 2000 and 1999, respectively. (2) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (3) Amount is less than $0.01. (4) Annualized. (5) Not annualized.
See Notes to Financial Statements 42 PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
PAR MOODY'S VALUE RATING (000) VALUE -------- ------- ------------ U.S. GOVERNMENT SECURITIES--0.8% U.S. TREASURY BONDS--0.8% U.S. Treasury Bonds 5.375%, 2/15/31 ............ Aaa $ 1,500 $ 1,468,829 ------------ TOTAL U.S. GOVERNMENT SECURITIES (Identified cost $1,463,126) ........................................... 1,468,829 ------------ AGENCY MORTGAGE-BACKED SECURITIES--11.1% GNMA 8%, 9/15/06 ............................... Aaa 3 3,095 GNMA 8%, 10/15/06 .............................. Aaa 66 70,397 GNMA 6.50%, '23-'32 ............................ Aaa 18,868 19,292,779 ------------ TOTAL AGENCY MORTGAGE-BACKED SECURITIES (Identified cost $19,009,099) .......................................... 19,366,271 ------------ AGENCY NON MORTGAGE-BACKED SECURITIES--1.7% Fannie Mae 6.625%, 9/15/09 ..................... Aaa 1,250 1,369,492 Fannie Mae 5.375%, 11/15/11 .................... Aaa 500 500,491 Fannie Mae 6.125%, 3/15/12 ..................... Aaa 1,000 1,058,229 ------------ TOTAL AGENCY NON MORTGAGE-BACKED SECURITIES (Identified cost $2,756,587) ........................................... 2,928,212 ------------ MUNICIPAL BONDS--9.5% CALIFORNIA--1.5% Alameda Corridor Transportation Authority Revenue Taxable Series C 6.50%, 10/1/19 ...................................... Aaa 750 781,402 Alameda Corridor Transportation Authority Revenue Taxable Series C 6.60%, 10/1/29 ...................................... Aaa 1,750 1,804,058 ------------ 2,585,460 ------------ CONNECTICUT--2.0% Mashantucket Western Pequot Tribe Revenue Taxable Series A 6.91%, 9/1/12 ....................................... Aaa 1,100 1,209,439 Mashantucket Western Pequot Tribe Revenue Taxable Series A 144A 6.57%, 9/1/13 (b) ................................... Aaa 2,140 2,263,029 ------------ 3,472,468 ------------ FLORIDA--2.2% Tampa Solid Waste System Revenue Taxable Series A 6.46%, 10/1/09 ...................... Aaa 2,250 2,377,283 University of Miami Exchangeable Revenue Taxable Series A 7.65%, 4/1/20 (d) ........... Aaa 1,310 1,387,853 ------------ 3,765,136 ------------ ILLINOIS--0.9% Illinois Educational Facilities Authority - Layola University Revenue Taxable Series C 7.12%, 7/1/11 ....................... Aaa 1,330 1,470,980 ------------ MASSACHUSETTS--0.9% Massachusetts Port Authority Revenue Taxable Series C 6.35%, 7/1/06 ............... Aa 1,500 1,581,930 ------------ NEW JERSEY--1.1% New Jersey Economic Development Authority Pension Funding Revenue Series A 7.425%, 2/15/29 ..................... Aaa 1,750 1,990,537 ------------ PAR MOODY'S VALUE RATING (000) VALUE -------- ------- ------------ TEXAS--0.9% Texas State University System Revenue Taxable 6.16%, 3/15/06 ....................... Aaa $ 1,495 $ 1,575,999 ------------ TOTAL MUNICIPAL BONDS (Identified cost $15,646,595) .......................................... 16,442,510 ------------ ASSET-BACKED SECURITIES--3.8% Arcel Finance Ltd. 144A 5.984%, 2/1/09 (b) ..... Aaa 675 688,121 CPL Transition Funding LLC 02-1, A4 5.96%, 7/15/13 ............................... Aaa 1,500 1,545,703 Green Tree Financial Corp. 97-5, M1 6.95%, 5/15/29 ............................... Aa 1,020 960,394 Litigation Settlement Monetized Fee Trust 02-5A A 6%, 10/25/32 ......................... Aa 850 833,425 Pass-Through Amortizing Credit Card Trust 02-1A A4FX 8.721%, 6/18/12 ................... Baa 1,000 1,000,000 Prudential Holdings LLC Series FSA 144A 7.245%, 12/18/23 (b) ......................... Aaa 1,500 1,522,350 ------------ TOTAL ASSET-BACKED SECURITIES (Identified cost $6,479,813) ........................................... 6,549,993 ------------ CORPORATE BONDS--29.1% AIRLINES--1.9% America West Airlines, Inc. 00-G 8.057%, 7/2/20 ....................................... Aaa 1,147 1,203,971 Northwest Airlines Corp. 00-1G 8.072%, 10/1/19 ...................................... Aaa 1,915 2,020,838 ------------ 3,224,809 ------------ ALUMINUM--0.3% Century Aluminum Co. 11.75%, 4/15/08 ........... Ba 500 540,000 ------------ AUTO PARTS & EQUIPMENT--1.1% Collins & Aikman Products 11.50%, 4/15/06 ...................................... B 1,000 952,500 Collins & Aikman Products 144A 10.75%, 12/31/11 (b) ................................. B 875 875,000 ------------ 1,827,500 ------------ BROADCASTING & CABLE TV--2.1% Charter Communication Holdings 10%, 5/15/11 ...................................... B 750 510,000 Comcast Cable Communications, Inc. 7.125%, 6/15/13 .............................. Baa 1,000 901,213 Cox Communications, Inc. 7.75%, 11/1/10 ........ Baa 1,000 951,136 CSC Holdings, Inc. Series B 7.625%, 4/1/11 ....................................... Ba 1,250 1,005,725 Insight Communications Co., Inc. 0%, 2/15/11 (d) .................................. Caa 600 261,000 ------------ 3,629,074 ------------ BUILDING PRODUCTS--0.8% CRH America, Inc. 6.95%, 3/15/12 ............... Baa 375 396,037 Nortek, Inc. Series B 9.875%, 6/15/11 .......... B 1,000 1,015,000 ------------ 1,411,037 ------------ CASINOS & GAMING--1.3% Hollywood Casino Corp. 11.25%, 5/1/07 .......... B 1,000 1,085,000 MGM Mirage, Inc. 8.50%, 9/15/10 ................ Ba 1,000 1,042,857 Mohegan Tribal Gaming Authority 8.125%, 1/1/06 ....................................... Ba 145 149,350 ------------ 2,277,207 ------------
See Notes to Financial Statements 43 PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES
PAR MOODY'S VALUE RATING (000) VALUE -------- ------- ------------ CONSUMER FINANCE--1.9% CIT Group, Inc. 7.75%, 4/2/12 .................. A $ 750 $ 738,320 Ford Motor Credit Co. 7.25%, 10/25/11 .......... A 875 879,197 General Motors Acceptance Corp. 6.875%, 9/15/11 ...................................... A 1,000 992,817 Household Finance Corp. 6.75%, 5/15/11 ......... A 750 745,500 ------------ 3,355,834 ------------ DIVERSIFIED FINANCIAL SERVICES--4.6% BNP U.S. Funding LLC Series A 144A 7.738%(b),(d) ................................ A 2,500 2,721,865 Erac USA Finance Co. 144A 7.35%, 6/15/08 (b) .................................. Baa 1,000 1,063,300 General Electric Capital Corp. Series MTNA 6%, 6/15/12 .................................. Aaa 1,750 1,741,700 Pemex Master Trust 144A 8.625%, 2/1/22 (b) ..... Baa 500 488,750 Pemex Project Funding Master Trust 9.125%, 10/13/10 ............................. Baa 1,000 1,050,000 Stilwell Financial, Inc. W.I. 7.75%, 6/15/09 ... A-(c) 1,000 986,280 ------------ 8,051,895 ------------ ENVIRONMENTAL SERVICES--0.4% Allied Waste Industries 7.40%, 9/15/35 ......... Ba 750 611,250 ------------ FERTILIZERS & AGRICULTURAL CHEMICALS--1.1% IMC Global, Inc. 7.625%, 11/1/05 ............... Ba 820 774,615 Terra Industries, Inc. Series B 10.50%, 6/15/05 ...................................... Caa 1,290 1,141,650 ------------ 1,916,265 ------------ FOOD DISTRIBUTORS--0.5% Fleming Cos., Inc. Series D 10.625%, 7/31/07 ...................................... B 925 911,125 ------------ GAS UTILITIES--1.7% Amerigas Partners/Eagle Finance 8.875%, 5/20/11 ...................................... Ba 1,000 1,045,000 El Paso Corp. 7%, 5/15/11 ...................... Baa 1,000 957,027 Transcontinental Gas Pipe Corp. 144A 8.875%, 7/15/12 (b) .......................... Baa 1,000 975,750 ------------ 2,977,777 ------------ HEALTH CARE DISTRIBUTORS & SERVICES--1.5% AmerisourceBergen Corp. 8.125%, 9/1/08 ......... Ba 1,000 1,037,500 Fresenius Medical Capital Trust IV 7.875%, 6/15/11 ...................................... Ba 1,250 1,137,500 Insight Health Services Corp. Series B 9.875%, 11/1/11 .............................. B 500 505,000 ------------ 2,680,000 ------------ HEALTH CARE FACILITIES--0.6% HEALTHSOUTH Corp. 8.375%, 10/1/11 .............. Ba 1,000 1,050,000 ------------ HOMEBUILDING--1.2% Ryland Group 8%, 8/15/06 ....................... Ba 1,000 1,012,500 WCI Communications, Inc. 9.125%, 5/1/12 ........ B 1,000 997,500 ------------ 2,010,000 ------------ HOTELS, RESORTS & CRUISE LINES--1.4% Park Place Entertainment Corp. 7%, 7/15/04 ...................................... Ba 1,000 1,011,676 Starwood Hotels Resorts Worldwide, Inc. 144A 7.875%, 5/1/12 (b) ...................... Ba 1,500 1,470,000 ------------ 2,481,676 ------------ INDUSTRIAL MACHINERY--0.6% Dresser, Inc. 144A 9.375%, 4/15/11 (b) ......... B 1,000 1,017,500 ------------ PAR MOODY'S VALUE RATING (000) VALUE -------- ------- ------------ LEISURE FACILITIES--0.3% Bally Total Fitness Holding Corp. Series D 9.875%, 10/15/07 ............................. B $ 575 $ 573,563 ------------ OIL & GAS DRILLING--0.6% Transocean, Inc. 6.75%, 4/15/05 ................ Baa 1,000 1,055,987 ------------ OIL & GAS EXPLORATION & PRODUCTION--1.5% Chesapeake Energy Corp. 8.375%, 11/1/08 ........ B 1,500 1,507,500 Magnum Hunter Resources, Inc. 144A 9.60%, 3/15/12 (b) ........................... B 295 305,325 Pioneer Natural Resource 7.50%, 4/15/12 ........ Ba 700 714,699 ------------ 2,527,524 ------------ OIL & GAS REFINING, MARKETING & TRANSPORTATION--0 5% Valero Energy Corp. 6.875%, 4/15/12 ............ Baa 750 770,686 ------------ PACKAGED FOODS AND MEATS--0.5% Land O Lakes, Inc. 144A 8.75%, 11/15/11 (b) .... Ba 1,000 935,000 ------------ PUBLISHING & PRINTING--0.6% Reed Elsevier Capital 6.75%, 8/1/11 ............ A 1,000 1,050,539 ------------ SPECIALTY STORES--0.6% Autonation, Inc. 9%, 8/1/08 .................... Ba 1,000 1,035,000 ------------ STEEL--1.5% AK Steel Corp. 9.125%, 12/15/06 ................ B 1,000 1,050,000 Allegheny Technologies, Inc. 8.375%, 12/15/11 ..................................... Baa 1,500 1,561,170 ------------ 2,611,170 ------------ TOTAL CORPORATE BONDS (Identified cost $50,343,933) .......................................... 50,532,418 ------------ NON-AGENCY MORTGAGE-BACKED SECURITIES--14.2% CS First Boston Mortgage Securities Corp. 97-SPCE, C 7.077%, 2/20/07 ................... AAA(c) 1,279 1,284,142 CS First Boston Mortgage Securities Corp. 97-1R, 1M4 7.398%, 2/28/22 (d) ............... Baa 1,029 1,022,511 Commercial Resecuritization Trust 01-ABC2, A1 7.17%, 2/21/08 ............................ Aaa 1,750 1,846,250 First Chicago/Lennar Trust 97-CHL1, D 8.168%, 5/29/08 (d) .......................... BB(c) 1,000 942,813 GMAC Commercial Mortgage Securities, Inc. 97-C2, A3 6.566%, 11/15/07 ................... Aaa 1,000 1,043,863 Lehman Brothers Commercial Conduit Mortgage Trust 99-C2, A2 7.325%, 9/15/09 ...................................... Aaa 2,100 2,313,311 Morgan Stanley Capital I 98-W F2, C 6.77%, 7/15/30 ...................................... AA(c) 1,700 1,820,063 Mortgage Capital Funding, Inc. 98-MC2, B 6.549%, 5/18/08 .............................. Aa 2,500 2,658,399 Norwest Asset Securities Corp. 99-5, B3 6.25%, 3/25/14 ............................... BBB(c) 1,336 1,329,969 Norwest Asset Securities Corp. 99-10, B3 6.25%, 4/25/14 ............................... BBB(c) 768 753,768 Norwest Asset Securities Corp. 97-7, B1 7%, 5/25/27 .................................. Aaa 1,832 1,877,977 Paine Webber Mortgage Acceptance Corp. 00-1, M 7.75%, 9/25/30 ....................... AA(c) 1,262 1,259,928 Residential Funding Mortgage Securities I 94-S7, M3 6.50%, 3/25/34 ................... Baa 3,109 3,157,814 Securitized Asset Sales, Inc. 95-6, B3 7%, 12/25/10 ..................................... NR 797 822,732 Structured Asset Securities Corp. 00-C2, L 3.589%, 3/20/03 (d) .......................... BB+(c) 1,102 1,086,870 Summit Mortgage Trust 00-1, B3 6.131%, 12/28/12 (d) ................................. A(c) 1,371 1,404,330 ------------ TOTAL NON-AGENCY MORTGAGE-BACKED SECURITIES (Identified cost $23,456,754) .......................................... 24,624,740 ------------
See Notes to Financial Statements 44 PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES
PAR MOODY'S VALUE RATING (000) VALUE -------- ------- ------------ FOREIGN GOVERNMENT SECURITIES--16.7% BULGARIA--0.8% Republic of Bulgaria IAB PDI 2.813%, 7/28/11 (d) .................................. B $ 1,470 $ 1,308,300 ------------ EL SALVADOR--1.2% Republic of El Salvador 144A 8.50%, 7/25/11 (b) .................................. Baa 1,000 1,070,000 Republic of El Salvador 144A 8.25%, 4/10/32 (b) .................................. Baa 1,000 960,000 ------------ 2,030,000 ------------ GUATEMALA--0.3% Republic of Guatemala RegS 10.25%, 11/8/11 ...................................... Ba 500 570,000 ------------ JAMAICA--1.8% Government of Jamaica 144A 11.75%, 5/15/11 (b) .................................. Ba 1,000 1,120,000 Government of Jamaica 10.625%, 6/20/17 ......... Ba 850 909,500 Government of Jamaica 11.625%, 1/15/22 ......... Ba 1,000 1,165,000 ------------ 3,194,500 ------------ MEXICO--2.6% United Mexican States 7.50%, 1/14/12 ........... Baa 2,500 2,471,250 United Mexican States 8.125%, 12/30/19 ......... Baa 2,000 1,948,000 ------------ 4,419,250 ------------ PANAMA--0.6% Republic of Panama 9.625%, 2/8/11 .............. Ba 1,000 972,500 ------------ PHILIPPINES--1.7% Republic of the Philippines 9.875%, 1/15/19 ...................................... Ba 2,000 1,992,000 Republic of the Philippines 10.625%, 3/16/25 ...................................... Ba 1,000 1,036,000 ------------ 3,028,000 ------------ POLAND--1.4% Republic of Poland 6.25%, 7/3/12 ............... Baa 1,500 1,498,125 Republic of Poland Series PDIB 6%, 10/27/14 (d) ................................. Baa 980 986,125 ------------ 2,484,250 ------------ RUSSIA--4.0% Russian Federation RegS 5%, 3/31/30 (d) ........ Ba 10,000 6,962,500 ------------ SOUTH AFRICA--2.0% Republic of South Africa Series 153 13%, 8/31/10 ...................................... A 19,000(f) 1,935,283 Republic of South Africa 7.375%, 4/25/12 ....... Baa 1,500 1,491,562 ------------ 3,426,845 ------------ UKRAINE--1.0% Government of Ukraine RegS 11%, 3/15/07 ...................................... B 1,780 1,808,925 ------------ TOTAL FOREIGN GOVERNMENT SECURITIES (Identified cost $29,940,107) .......................................... 30,205,070 ------------ FOREIGN CORPORATE BONDS--8.5% CANADA--1.8% Rogers Cable, Inc. 144A 7.875%, 5/1/12 (b) ..... Baa 1,000 1,010,030 Telus Corp. 8%, 6/1/11 ......................... Baa 1,000 878,100 Tembec Industries, Inc. 7.75%, 3/15/12 ......... Ba 1,250 1,231,250 ------------ 3,119,380 ------------ PAR MOODY'S VALUE RATING (000) VALUE -------- ------- ------------ CAYMAN ISLANDS--0.4% Petrobras International Finance 9.75%, 7/6/11 ....................................... Baa $ 1,000 $ 780,000 ------------ CHILE--2.1% Empresa Nacional de Electricidad SA Series B 8.50%, 4/1/09 ....................... Baa 2,000 1,906,600 HQI Transelectric Chile SA 7.875%, 4/15/11 ...................................... Baa 1,675 1,735,263 ------------ 3,641,863 ------------ IRELAND--0.5% Clondalkin Industries plc 10.625%, 1/15/10 ...................................... B 750(g) 807,384 ------------ MALAYSIA--0.3% Petronas Capital Ltd. 144A 7%, 5/22/12 (b) ..... Baa 500 505,650 ------------ MEXICO--0.8% Grupo Televisa SA 144A 8.50%, 3/11/32 (b) ...... Baa 415 361,050 Grupo Transportacion Ferroviaria Mexicana SA de CV 11.75%, 6/15/09 (d) ................. B 1,100 1,036,750 ------------ 1,397,800 ------------ NETHERLANDS--1.1% Deutsche Telekom International Finance DT 8.50%, 6/15/10 (d) ........................... Baa 1,000 995,661 Deutsche Telekom International Finance DT 8.75%, 6/15/30 (d) ........................... Baa 1,000 929,606 ------------ 1,925,267 ------------ TUNISIA--0.6% Banque Centrale de Tunisie 7.375%, 4/25/12 ...................................... Baa 1,000 965,000 ------------ UNITED KINGDOM--0.2% Xerox Capital Europe plc 5.875%, 5/15/04 ....... B 500 412,500 ------------ TOTAL FOREIGN CORPORATE BONDS (Identified cost $14,141,881) .......................................... 13,554,844 ------------ CREDIT LINKED NOTES--0.6% ELECTRONIC EQUIPMENT & INSTRUMENTS--0.6% STEERS Credit Linked Trust 2001, Series SLR-2 Repackaged Selectron Corp. 0%, 5/20/03 (h),(d) .......................... NR 1,000 970,000 ------------ TOTAL CREDIT LINKED NOTES (Identified cost $1,000,000) ........................................... 970,000 ------------ TARGETED RETURN INDEX SECURITIES--1.6% Lehman Brothers Targeted Return Index Securities Trust 10-02 144A 6.851%, 1/15/12 (b),(d) .............................. A 2,736 2,808,066 ------------ TOTAL TARGETED RETURN INDEX SECURITIES (Identified cost $2,795,543) ........................................... 2,808,066 ------------ LOAN PARTICIPATION NOTES--1.6% Kingdom of Morroco Series A 2.75%, 1/5/09 (d) ................................... Ba 1,750 1,557,500 United Pan-Europe Communications 5.84%, 3/31/09 (d) .................................. B 1,500 1,215,000 ------------ TOTAL LOAN PARTICIPATION NOTES (Identified cost $2,779,952) ........................................... 2,772,500 ------------
See Notes to Financial Statements 45 PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES
SHARES VALUE -------- ------------ PREFERRED STOCKS--0.0% ALTERNATIVE CARRIERS--0.0% Global Crossing Holdings Ltd. Pfd. PIK 10.50% (e),(h) ........................................ 741 $ 0 ------------ TOTAL PREFERRED STOCKS (Identified cost $7,405) ............................................... 0 ------------ COMMON STOCKS--0.0% INTEGRATED TELECOMMUNICATION SERVICES--0.0% AT&T Latin America Corp. Class A (e) .................... 64,050 34,587 ------------ TOTAL COMMON STOCKS (Identified cost $281,820) ............................................. 34,587 ------------ WARRANTS--0.0% AEROSPACE & DEFENSE--0.0% Loral Space & Communications, Inc. Warrants (e),(h),(i) . 1,000 1,000 ------------ WIRELESS TELECOMMUNICATION SERVICES--0.0% Leap Wireless International, Inc. 144A Warrants (b),(e) . 1,500 0 ------------ TOTAL WARRANTS (Identified cost $7,500) ............................................... 1,000 ------------ TOTAL LONG TERM INVESTMENTS--99.2% (Identified cost $170,110,115) ......................................... 172,259,040 ------------ STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------- ------------ SHORT-TERM OBLIGATIONS--2.1% COMMERCIAL PAPER--1.9% Special Purpose Accounts Receivable Cooperative Corp. 2%, 7/1/02 ................. A-1 $3,224 $ 3,223,642 ------------ FEDERAL AGENCY SECURITIES--0.2% Fannie Mae Discount Note 1.75%, 7/3/02 ......... AAA 420 419,918 ------------ TOTAL SHORT-TERM OBLIGATIONS (Identified cost $3,643,959) ........................................... 3,643,560 ------------ TOTAL INVESTMENTS--101.3% (Identified Cost $173,754,074) ......................................... 175,902,600(a) Other assets and liabilities, net--(1.3)% .............................. (2,219,397) ------------ NET ASSETS--100.0% ....................................................... $173,683,203 ============ (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $4,778,765 and gross depreciation of $2,619,521 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $173,743,356. (b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2002, these securities amounted to a value of $22,160,786 or 12.8% of net assets. (c) As rated by Standard & Poors or Fitch. (d) Variable or step coupon security; interest rate shown reflects the rate currently in effect. (e) Non-income producing. (f) Par value represents South African Rand. (g) Par value represents Euro. (h) Illiquid. At June 30, 2002, these securities amounted to $971,000 or 0.5% of net assets. (i) Security valued at fair value as determined in good faith by or under the direction of the Trustees. At June 30, 2002, this security, which is included in illiquid securities above, amounted to a value of $1,000 or 0% of net assets.
See Notes to Financial Statements 46 PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $173,754,074) ...................... $175,902,600 Cash ............................................................................... 999 Receivables Interest and dividends ........................................................... 2,568,529 Fund shares sold ................................................................. 52,800 Investment securities sold ....................................................... 2,996 ------------ Total assets ................................................................... 178,527,924 ------------ LIABILITIES Payables Investment securities purchased .................................................. 4,462,805 Fund shares repurchased .......................................................... 191,568 Investment advisory fee .......................................................... 72,300 Financial agent fee .............................................................. 15,568 Trustees' fee .................................................................... 3,717 Accrued expenses ................................................................... 98,763 ------------ Total liabilities .............................................................. 4,844,721 ------------ NET ASSETS ......................................................................... $173,683,203 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $205,698,861 Undistributed net investment income .............................................. 528,234 Accumulated net realized loss .................................................... (34,693,318) Net unrealized appreciation ...................................................... 2,149,426 ------------ NET ASSETS ......................................................................... $173,683,203 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 20,583,002 ============ Net asset value and offering price per share ....................................... $8.44 =====
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Interest ................................................................................. $ 6,859,729 Dividends ................................................................................ 13,876 ----------- Total investment income ................................................................ 6,873,605 ----------- EXPENSES Investment advisory fee .................................................................. 430,394 Financial agent fee ...................................................................... 90,909 Printing ................................................................................. 19,824 Professional ............................................................................. 17,116 Custodian ................................................................................ 15,414 Trustees ................................................................................. 3,455 Miscellaneous ............................................................................ 10,176 ----------- Total expenses ......................................................................... 587,288 Custodian fees paid indirectly ......................................................... (2,666) ----------- Net expenses ........................................................................... 584,622 ----------- NET INVESTMENT INCOME ...................................................................... 6,288,983 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .......................................................... (5,855,961) Net realized gain on foreign currency transactions ....................................... 1,717 Net change in unrealized appreciation (depreciation) on investments ...................... 4,311,359 Net change in unrealized appreciation (depreciation) on foreign currency and foreign currency transactions .................................................................. (4,072) ----------- NET LOSS ON INVESTMENTS .................................................................... (1,546,957) ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....................................... $ 4,742,026 ===========
See Notes to Financial Statements 47 PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ------------ ------------ FROM OPERATIONS Net investment income (loss) ................................................................ $ 6,288,983 $ 13,525,541 Net realized gain (loss) .................................................................... (5,854,244) (5,676,289) Net change in unrealized appreciation (depreciation) ........................................ 4,307,287 1,870,045 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................. 4,742,026 9,719,297 ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ....................................................................... (7,086,740) (13,336,322) ------------ ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ................................... (7,086,740) (13,336,322) ------------ ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (3,108,014 and 4,560,206 shares, respectively) ................ 26,818,562 40,237,530 Net asset value of shares issued from reinvestment of distributions (839,749 and 1,546,724 shares, respectively) ................................................ 7,086,740 13,336,322 Cost of shares repurchased (2,915,887 and 4,859,933 shares, respectively) ................... (25,106,575) (42,828,727) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................... 8,798,727 10,745,125 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ....................................................... 6,454,013 7,128,100 NET ASSETS Beginning of period ......................................................................... 167,229,190 160,101,090 ------------ ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $528,234 AND $1,325,991, RESPECTIVELY) ............................................................................. $173,683,203 $167,229,190 ============ ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, 6/30/02 --------------------------------------------------- (UNAUDITED) 2001(4) 2000 1999 1998 1997 ----------- ------- ------ ------ ------ ------ Net asset value, beginning of period ................. $ 8.55 $ 8.75 $ 8.92 $ 9.18 $10.38 $10.34 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ....................... 0.31 0.72(3) 0.75 0.73 0.77 0.75 Net realized and unrealized gain (loss) ............ (0.07) (0.21) (0.19) (0.24) (1.17) 0.34 ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ................. 0.24 0.51 0.56 0.49 (0.40) 1.09 ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ............... (0.35) (0.71) (0.73) (0.75) (0.74) (0.77) Distributions from net realized gains .............. -- -- -- -- (0.06) (0.28 ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS .............................. (0.35) (0.71) (0.73) (0.75) (0.80) (1.05) ------ ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ............................ (0.11) (0.20) (0.17) (0.26) (1.20) 0.04 ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ....................... $ 8.44 $ 8.55 $ 8.75 $ 8.92 $ 9.18 $10.38 ====== ====== ====== ====== ====== ====== Total return ......................................... 2.75%(6) 6.09% 6.47% 5.46% (4.02)% 10.93% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ................ $173,683 $167,229 $160,101 $172,836 $187,363 $191,627 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (1) ............................. 0.68%(2)(5) 0.65%(2) 0.65% 0.65% 0.64% 0.65% Net investment income .............................. 7.31%(5) 8.14% 8.45% 7.79% 7.61% 7.25% Portfolio turnover ................................... 108%(6) 188% 148% 125% 160% 151% (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.71%, 0.69%, 0.71% and 0.66% for the periods ended December 31, 2001, 2000, 1999 and 1997, respectively. (2) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (3) Computed using average shares outstanding. (4) As required, effective January 1, 2001, the Fund has adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities and including paydown gains and losses in interest income. The effect of this change for the year ended December 31, 2001 was to increase the ratio of net investment income to average net assets from 8.13% to 8.14%. There was no effect to net investment income per share and net realized and unrealized gain (loss) per share. Per share ratios and supplemental data for prior periods have not been restated to reflect this change. (5) Annualized. (6) Not annualized.
See Notes to Financial Statements 48 PHOENIX-HOLLISTER VALUE EQUITY SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE ------- ----------- COMMON STOCKS--95.7% AEROSPACE & DEFENSE--5.6% Boeing Co. (The) ........................................ 33,000 $ 1,485,000 General Dynamics Corp. .................................. 7,000 744,450 Integrated Defense Technologies, Inc. (b) ............... 39,800 1,171,314 Raytheon Co. ............................................ 28,400 1,157,300 United Technologies Corp. ............................... 4,700 319,130 ----------- 4,877,194 ----------- AIR FREIGHT & COURIERS--1.6% Airborne, Inc. .......................................... 36,000 691,200 FedEx Corp. ............................................. 13,000 694,200 ----------- 1,385,400 ----------- AIRLINES--0.8% Continental Airlines, Inc. Class B (b) .................. 20,000 315,600 Delta Air Lines, Inc. ................................... 20,000 400,000 ----------- 715,600 ----------- ALUMINUM--1.1% Alcoa, Inc. ............................................. 27,900 924,885 ----------- APPAREL RETAIL--0.6% Talbots, Inc. (The) ..................................... 15,000 525,000 ----------- APPAREL, ACCESSORIES & LUXURY GOODS--2.5% Liz Claiborne, Inc. ..................................... 29,000 922,200 Nautica Enterprises, Inc. (b) ........................... 27,000 350,730 Russell Corp. ........................................... 44,500 856,625 ----------- 2,129,555 ----------- BANKS--10.3% AmSouth Bancorp ......................................... 32,000 716,160 Bank of New York Co., Inc. (The) ........................ 19,800 668,250 Comerica, Inc. .......................................... 22,900 1,406,060 Compass Bancshares, Inc. ................................ 20,000 672,000 Cullen/Frost Bankers, Inc. .............................. 34,000 1,222,300 Popular, Inc. ........................................... 21,800 734,224 Southwest Bancorp. of Texas, Inc. (b) ................... 28,000 1,014,160 Sterling Bancshares, Inc. ............................... 8,000 118,160 U.S. Bancorp ............................................ 23,900 558,065 Union Planters Corp. .................................... 16,350 529,250 Wells Fargo & Co. ....................................... 24,600 1,231,476 ----------- 8,870,105 ----------- BIOTECHNOLOGY--0.8% SICOR, Inc. (b) ......................................... 36,100 669,294 ----------- BUILDING PRODUCTS--1.0% York International Corp. ................................ 24,400 824,476 ----------- CASINOS & GAMING--1.2% Park Place Entertainment Corp. (b) ...................... 75,800 776,950 WMS Industries, Inc. (b) ................................ 20,000 245,000 ----------- 1,021,950 ----------- COMMERCIAL PRINTING--1.6% Valassis Communications, Inc. (b) ....................... 38,700 1,412,550 ----------- COMMODITY CHEMICALS--0.5% Lyondell Chemical Co. ................................... 31,300 472,630 ----------- CONSTRUCTION MATERIALS--0.7% Texas Industries, Inc. .................................. 19,600 617,204 ----------- CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS--1.1% Caterpillar, Inc. ....................................... 20,000 979,000 ----------- SHARES VALUE ------- ----------- CONSUMER FINANCE--1.8% American Capital Strategies Ltd. ........................ 30,000 $ 824,100 MBNA Corp. .............................................. 22,600 747,382 ----------- 1,571,482 ----------- DIVERSIFIED CHEMICALS--2.3% Dow Chemical Co. (The) .................................. 25,000 859,500 Du Pont (E.I.) de Nemours & Co. ......................... 13,000 577,200 Olin Corp. .............................................. 26,000 575,900 ----------- 2,012,600 ----------- DIVERSIFIED COMMERCIAL SERVICES--2.1% ABM Industries, Inc. .................................... 7,500 130,200 Arbitron, Inc. (b) ...................................... 4,300 134,160 Cendant Corp. (b) ....................................... 95,000 1,508,600 ----------- 1,772,960 ----------- DIVERSIFIED FINANCIAL SERVICES--6.7% Ambac Financial Group, Inc. ............................. 29,500 1,982,400 American Express Co. .................................... 18,000 653,760 J.P. Morgan Chase & Co. ................................. 22,900 776,768 Merrill Lynch & Co., Inc. ............................... 10,000 405,000 Prudential Financial, Inc. (b) .......................... 55,100 1,838,136 SWS Group, Inc. ......................................... 8,000 156,960 ----------- 5,813,024 ----------- ELECTRIC UTILITIES--0.8% Dominion Resources, Inc. ................................ 2,000 132,400 Hawaiian Electric Industries, Inc. ...................... 10,000 425,500 PNM Resources, Inc. ..................................... 6,000 145,200 ----------- 703,100 ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS--0.2% Diebold, Inc. ........................................... 4,700 175,028 ----------- EMPLOYMENT SERVICES--1.7% Manpower, Inc. .......................................... 27,700 1,017,975 Watson Wyatt & Co. Holdings (b) ......................... 18,200 440,804 ----------- 1,458,779 ----------- ENVIRONMENTAL SERVICES--0.5% Waste Management, Inc. .................................. 15,000 390,750 ----------- GAS UTILITIES--0.6% NiSource, Inc. .......................................... 24,000 523,920 ----------- GENERAL MERCHANDISE STORES--0.1% Target Corp. ............................................ 2,500 95,250 ----------- HOME FURNISHINGS--0.8% Ethan Allen Interiors, Inc. ............................. 18,600 648,210 ----------- HOTELS, RESORTS & CRUISE LINES--0.9% Hilton Hotels Corp. ..................................... 27,000 375,300 Marriott International, Inc. Class A .................... 10,000 380,500 ----------- 755,800 ----------- HOUSEHOLD APPLIANCES--0.8% Toro Co. (The) .......................................... 12,000 682,080 ----------- HOUSEHOLD PRODUCTS--2.7% Clorox Co. (The) ........................................ 15,000 620,250 Kimberly-Clark Corp. .................................... 27,000 1,674,000 ----------- 2,294,250 ----------- INDUSTRIAL CONGLOMERATES--1.3% Textron, Inc. ........................................... 24,600 1,153,740 -----------
See Notes to Financial Statements 49 PHOENIX-HOLLISTER VALUE EQUITY SERIES
SHARES VALUE ------- ----------- INDUSTRIAL MACHINERY--2.0% Illinois Tool Works, Inc. ............................... 10,000 $ 683,000 Watts Industries, Inc. Class A .......................... 53,000 1,052,050 ----------- 1,735,050 ----------- INSURANCE BROKERS--0.7% Aon Corp. ............................................... 20,000 589,600 ----------- INTEGRATED TELECOMMUNICATION SERVICES--1.1% Verizon Communications, Inc. ............................ 24,100 967,615 ----------- LEISURE FACILITIES--2.0% Six Flags, Inc. (b) ..................................... 120,700 1,744,115 ----------- LEISURE PRODUCTS--2.0% Hasbro, Inc. ............................................ 97,000 1,315,320 Scientific Games Corp. Class A (b) ...................... 56,400 447,816 ----------- 1,763,136 ----------- LIFE & HEALTH INSURANCE--1.9% Torchmark Corp. ......................................... 16,200 618,840 UnumProvident Corp. ..................................... 40,100 1,020,545 ----------- 1,639,385 ----------- MANAGED HEALTH CARE--3.7% Aetna, Inc. ............................................. 22,000 1,055,340 Health Net, Inc. (b) .................................... 45,000 1,204,650 Humana, Inc. (b) ........................................ 58,700 917,481 ----------- 3,177,471 ----------- MARINE--1.2% Teekay Shipping Corp. ................................... 27,400 1,011,334 ----------- MULTI-LINE INSURANCE--1.0% Loews Corp. ............................................. 16,000 847,840 ----------- MULTI-UTILITIES & UNREGULATED POWER--0.1% Duke Energy Corp. ....................................... 3,700 115,070 ----------- OIL & GAS DRILLING--1.1% Rowan Cos., Inc. (b) .................................... 42,900 920,205 ----------- OIL & GAS EQUIPMENT & SERVICES--2.1% Halliburton Co. ......................................... 60,300 961,182 National-Oilwell, Inc. (b) .............................. 42,500 894,625 ----------- 1,855,807 ----------- OIL & GAS EXPLORATION & PRODUCTION--1.9% Pioneer Natural Resources Co. ........................... 40,000 1,042,000 Spinnaker Exploration Co. (b) ........................... 16,400 590,728 ----------- 1,632,728 ----------- PACKAGED FOODS AND MEATS--1.2% Kraft Foods, Inc. Class A ............................... 25,000 1,023,750 ----------- PAPER PRODUCTS--1.1% International Paper Co. ................................. 22,000 958,760 ----------- PHARMACEUTICALS--2.9% Bristol-Myers Squibb Co. ................................ 48,300 1,241,310 Mylan Laboratories, Inc. ................................ 41,200 1,291,620 ----------- 2,532,930 ----------- PROPERTY & CASUALTY INSURANCE--3.0% Allstate Corp. (The) .................................... 44,100 1,630,818 Chubb Corp. (The) ....................................... 14,000 991,200 ----------- 2,622,018 ----------- SHARES VALUE ------- ----------- RAILROADS--3.2% CSX Corp. ............................................... 37,600 $ 1,317,880 Union Pacific Corp. ..................................... 23,200 1,468,096 ----------- 2,785,976 ----------- REITS--1.3% Apartment Investment & Management Co. Class A ........... 5,000 246,000 iStar Financial, Inc. ................................... 25,000 712,500 Prentiss Properties Trust ............................... 6,000 190,500 ----------- 1,149,000 ----------- SOFT DRINKS--0.6% PepsiCo, Inc. ........................................... 10,000 482,000 ----------- SPECIALTY STORES--3.4% Barnes & Noble, Inc. (b) ................................ 23,400 618,462 Office Depot, Inc. (b) .................................. 41,900 703,920 Pep Boys-Manny, Moe & Jack (The) ........................ 50,000 842,500 Pier 1 Imports, Inc. .................................... 37,900 795,900 ----------- 2,960,782 ----------- TIRES & RUBBER--0.5% Bandag, Inc. ............................................ 14,000 396,480 ----------- TOBACCO--3.6% Philip Morris Cos., Inc. ................................ 33,000 1,441,440 UST, Inc. ............................................... 50,000 1,700,000 ----------- 3,141,440 ----------- TRUCKING--1.4% Pacer International, Inc. (b) ........................... 68,800 1,186,112 ----------- TOTAL COMMON STOCKS (Identified cost $82,766,538) ........................................ 82,714,420 ----------- FOREIGN COMMON STOCKS--2.0% CASINOS & GAMING--1.2% Magna Entertainment Corp. Class A (Canada) (b) .......... 144,200 1,007,958 ----------- OIL & GAS DRILLING--0.8% Nabors Industries Ltd. (Barbados) (b) ................... 21,200 748,360 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $1,923,794) ......................................... 1,756,318 ----------- TOTAL LONG TERM INVESTMENTS--97.7% (Identified cost $84,690,332) ........................................ 84,470,738 ----------- STANDARD PAR & POOR'S VALUE RATING (000) -------- ----- SHORT-TERM OBLIGATIONS--2.5% COMMERCIAL PAPER--2.5% Emerson Electric Co. 2%, 7/1/02 ................ A-1 $1,125 1,125,000 Receivables Capital Corp. 1.90%, 7/1/02 ........ A-1+ 300 300,000 Verizon Network Funding Corp. 1.76%, 7/16/02 ...................................... A-1+ 710 709,479 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $2,134,479) ......................................... 2,134,479 ----------- TOTAL INVESTMENTS--100.2% (Identified Cost $86,824,811) ........................................ 86,605,217(a) Other assets and liabilities, net--(0.2)% ............................ (130,312) ----------- NET ASSETS--100.0% ..................................................... $86,474,905 =========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $4,400,664 and gross depreciation of $5,017,616 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $87,222,169. (b) Non-income producing.
See Notes to Financial Statements 50 PHOENIX-HOLLISTER VALUE EQUITY SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $86,824,811) ....................... $86,605,217 Cash ............................................................................... 1,000 Receivables Investment securities sold ....................................................... 2,263,172 Dividends and interest ........................................................... 118,437 Fund shares sold ................................................................. 79,040 ----------- Total assets ................................................................... 89,066,866 ----------- LIABILITIES Payables Investment securities purchased .................................................. 2,430,794 Fund shares repurchased .......................................................... 30,018 Investment advisory fee .......................................................... 51,324 Financial agent fee .............................................................. 9,778 Trustees' fee .................................................................... 3,717 Accrued expenses ................................................................... 66,330 ----------- Total liabilities .............................................................. 2,591,961 ----------- NET ASSETS ......................................................................... $86,474,905 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $98,232,893 Undistributed net investment income .............................................. 120,758 Accumulated net realized loss .................................................... (11,659,152) Net unrealized depreciation ...................................................... (219,594) ----------- NET ASSETS ......................................................................... $86,474,905 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 7,479,612 =========== Net asset value and offering price per share ....................................... $11.56 ======
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ........................................................................ $ 668,383 Interest ......................................................................... 16,653 Foreign taxes withheld ........................................................... (365) ----------- Total investment income ........................................................ 684,671 ----------- EXPENSES Investment advisory fee .......................................................... 307,455 Financial agent fee .............................................................. 56,779 Printing ......................................................................... 25,988 Professional ..................................................................... 16,052 Custodian ........................................................................ 11,685 Trustees ......................................................................... 3,455 Miscellaneous .................................................................... 4,430 ----------- Total expenses ................................................................. 425,844 Less expense borne by investment adviser ....................................... (22,978) Custodian fees paid indirectly ................................................. (88) ----------- Net expenses ................................................................... 402,778 ----------- NET INVESTMENT INCOME .............................................................. 281,893 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................. (5,286,419) Net change in unrealized appreciation (depreciation) on investments .............. (1,017,816) ----------- NET LOSS ON INVESTMENTS ............................................................ (6,304,235) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $(6,022,342) ===========
See Notes to Financial Statements 51 PHOENIX-HOLLISTER VALUE EQUITY SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ------------ ----------- FROM OPERATIONS Net investment income (loss) ..................................................................... $ 281,893 $ 736,897 Net realized gain (loss) ......................................................................... (5,286,419) (6,316,439) Net change in unrealized appreciation (depreciation) ............................................. (1,017,816) (6,361,675) ------------ ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...................................... (6,022,342) (11,941,217) ------------ ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ............................................................................ (297,990) (600,943) Net realized short-term gains .................................................................... -- (440,505) ------------ ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ........................................ (297,990) (1,041,448) ------------ ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (1,818,264 and 5,154,942 shares, respectively) ..................... 22,254,349 68,982,484 Net asset value of shares issued from reinvestment of distributions (26,030 and 80,045 shares, respectively) .................................................................................. 297,990 1,041,448 Cost of shares repurchased (1,145,709 and 1,418,021 shares, respectively) ........................ (13,916,230) (18,342,907) ------------ ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ........................................ 8,636,109 51,681,025 ------------ ----------- NET INCREASE (DECREASE) IN NET ASSETS ............................................................ 2,315,777 38,698,360 NET ASSETS Beginning of period .............................................................................. 84,159,128 45,460,768 ------------ ----------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $120,758 AND $136,855, RESPECTIVELY) .................................................................................. $ 86,474,905 $84,159,128 ============ ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS YEAR ENDED FROM ENDED DECEMBER 31, INCEPTION 6/30/02 ---------------------------- 3/2/98 TO (UNAUDITED) 2001 2000 1999 12/31/98 ----------- ------ ------ ------ -------- Net asset value, beginning of period ............................... $12.41 $15.34 $12.91 $11.03 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ..................................... 0.04 0.11 0.07 0.04 0.05 Net realized and unrealized gain (loss) .......................... (0.85) (2.86) 3.98 2.63 1.03 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ............................... (0.81) (2.75) 4.05 2.67 1.08 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ............................. (0.04) (0.09) (0.08) (0.04) (0.05) Distributions from net realized gains ............................ -- (0.09) (1.54) (0.75) -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS ............................................ (0.04) (0.18) (1.62) (0.79) (0.05) ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE .......................................... (0.85) (2.93) 2.43 1.88 1.03 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ..................................... $11.56 $12.41 $15.34 $12.91 $11.03 ====== ====== ====== ====== ====== Total return ....................................................... (6.52)%(2) (17.96)% 32.16% 24.33% 10.79%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) .............................. $86,475 $84,159 $45,461 $17,470 $9,533 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ........................................... 0.92%(1)(4) 0.85%(4) 0.85% 0.85% 0.85%(1) Net investment income ............................................ 0.64%(1) 1.11% 0.79% 0.41% 0.85%(1) Portfolio turnover ................................................. 76%(2) 245% 166% 168% 77%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.97%, 1.00%, 1.33%, 2.03% and 2.46% for the periods ended June 30, 2002, December 31, 2001, 2000, 1999 and 1998, respectively. (4) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 52 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------ ---------- U.S. GOVERNMENT SECURITIES--0.2% U.S. TREASURY NOTES--0.2% U.S. Treasury Notes 6.25%, 7/31/02 (c) ............ AAA $150 $ 150,616 ----------- TOTAL U.S. GOVERNMENT SECURITIES (Identified cost $150,532) ........................................... 150,616 ----------- SHARES -------- COMMON STOCKS--96.4% ADVERTISING--0.1% Omnicom Group, Inc. ..................................... 2,400 109,920 ----------- AEROSPACE & DEFENSE--2.1% Boeing Co. (The) ........................................ 7,000 315,000 General Dynamics Corp. .................................. 2,200 233,970 Honeywell International, Inc. ........................... 9,000 317,070 Lockheed Martin Corp. ................................... 5,300 368,350 United Technologies Corp. ............................... 11,100 753,690 ----------- 1,988,080 ----------- AIR FREIGHT & COURIERS--0.2% FedEx Corp. ............................................. 2,900 154,860 ----------- AIRLINES--0.2% AMR Corp. (b) ........................................... 600 10,116 Delta Air Lines, Inc. ................................... 3,700 74,000 Southwest Airlines Co. .................................. 4,200 67,872 ----------- 151,988 ----------- ALTERNATIVE CARRIERS--0.0% American Tower Corp. Class A (b) ........................ 5,700 19,665 ----------- ALUMINUM--0.6% Alcoa, Inc. ............................................. 15,800 523,770 ----------- APPAREL RETAIL--0.6% Abercrombie & Fitch Co. Class A (b) .................... 6,400 154,368 Limited Brands .......................................... 4,100 87,330 TJX Cos., Inc. (The) .................................... 18,800 368,668 ----------- 610,366 ----------- APPAREL, ACCESSORIES & LUXURY GOODS--0.2% Jones Apparel Group, Inc. (b) ........................... 5,500 206,250 ----------- APPLICATION SOFTWARE--0.1% Citrix Systems, Inc. (b) ................................ 3,700 22,348 PeopleSoft, Inc. (b) .................................... 2,300 34,224 Rational Software Corp. (b) ............................. 3,700 30,377 ----------- 86,949 ----------- AUTO PARTS & EQUIPMENT--0.6% Delphi Corp. ............................................ 13,000 171,600 Johnson Controls, Inc. .................................. 2,700 220,347 Lear Corp. (b) .......................................... 2,100 97,125 Visteon Corp. ........................................... 4,600 65,320 ----------- 554,392 ----------- AUTOMOBILE MANUFACTURERS--1.0% Ford Motor Co. .......................................... 21,900 350,400 General Motors Corp. .................................... 11,400 609,330 ----------- 959,730 ----------- SHARES VALUE -------- ----------- BANKS--6.6% AmSouth Bancorp ......................................... 6,400 $ 143,232 Bank of America Corp. ................................... 8,800 619,168 Bank of New York Co., Inc. (The) ........................ 5,000 168,750 Bank One Corp. .......................................... 16,300 627,224 Banknorth Group, Inc. ................................... 1,400 36,428 BB&T Corp. .............................................. 700 27,020 Compass Bancshares, Inc. ................................ 1,000 33,600 FirstMerit Corp. ........................................ 300 8,274 FleetBoston Financial Corp. ............................. 20,600 666,410 Golden State Bancorp, Inc. .............................. 2,300 83,375 GreenPoint Financial Corp. .............................. 3,700 181,670 Hibernia Corp. Class A .................................. 2,300 45,517 IndyMac Bancorp, Inc. (b) ............................... 1,200 27,216 KeyCorp ................................................. 600 16,380 Marshall & Ilsley Corp. ................................. 200 6,186 National Commerce Financial Corp. ....................... 300 7,890 North Fork Bancorp., Inc. ............................... 1,800 71,658 Northern Trust Corp. .................................... 4,500 198,270 PNC Financial Services Group ............................ 7,600 397,328 Regions Financial Corp. ................................. 2,300 80,845 SouthTrust Corp. ........................................ 6,200 161,944 SunTrust Banks, Inc. .................................... 3,800 257,336 TCF Financial Corp. ..................................... 1,300 63,830 U.S. Bancorp ............................................ 38,800 905,980 Union Planters Corp. .................................... 900 29,133 Wachovia Corp. .......................................... 8,700 332,166 Washington Mutual, Inc. ................................. 18,600 690,246 Wells Fargo & Co. ....................................... 7,000 350,420 Wilmington Trust Corp. .................................. 400 12,200 ----------- 6,249,696 ----------- BIOTECHNOLOGY--1.1% Amgen, Inc. (b) ......................................... 13,500 565,380 Genzyme Corp. (b) ....................................... 500 9,620 Human Genome Sciences, Inc. (b) ......................... 6,700 89,780 Immunex Corp. (b) ....................................... 3,500 78,190 MedImmune, Inc. (b) ..................................... 9,900 261,360 Vertex Pharmaceuticals, Inc. (b) ........................ 2,400 39,072 ----------- 1,043,402 ----------- BREWERS--0.2% Anheuser-Busch Cos., Inc. ............................... 2,800 140,000 ----------- BROADCASTING & CABLE TV--0.9% Charter Communications, Inc. Class A (b) ................ 10,600 43,248 Clear Channel Communications, Inc. (b) .................. 3,200 102,464 Comcast Corp. Class A (b) ............................... 18,500 441,040 Cox Communications, Inc. Class A (b) .................... 4,200 115,710 Liberty Media Corp. Class A (b) ......................... 12,600 126,000 ----------- 828,462 ----------- BUILDING PRODUCTS--0.1% Masco Corp. ............................................. 4,100 111,151 ----------- CASINOS & GAMING--0.2% Harrah's Entertainment, Inc. (b) ........................ 2,400 106,440 Park Place Entertainment Corp. (b) ...................... 3,600 36,900 ----------- 143,340 ----------- COMMODITY CHEMICALS--0.0% Lyondell Chemical Co. ................................... 2,000 30,200 ----------- COMPUTER & ELECTRONICS RETAIL--0.1% Best Buy Co., Inc. (b) .................................. 2,700 98,010 -----------
See Notes to Financial Statements 53 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES
SHARES VALUE -------- ----------- COMPUTER HARDWARE--3.1% Dell Computer Corp. (b) ................................. 30,400 $ 794,656 Hewlett-Packard Co. ..................................... 44,900 686,072 International Business Machines Corp. (c) ............... 14,800 1,065,600 NCR Corp. (b) ........................................... 7,600 262,960 Sun Microsystems, Inc. (b) .............................. 32,300 161,823 ----------- 2,971,111 ----------- COMPUTER STORAGE & PERIPHERALS--0.2% EMC Corp. (b) ........................................... 17,700 133,635 Lexmark International, Inc. (b) ......................... 500 27,200 Network Appliance, Inc. (b) ............................. 1,500 18,660 ----------- 179,495 ----------- CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS--0.3% Caterpillar, Inc. ....................................... 4,000 195,800 Deere & Co. ............................................. 1,500 71,850 ----------- 267,650 ----------- CONSUMER FINANCE--1.9% AmeriCredit Corp. (b) ................................... 4,200 117,810 Capital One Financial Corp. ............................. 7,500 457,875 Countrywide Credit Industries, Inc. ..................... 10,800 521,100 Household International, Inc. ........................... 9,400 467,180 MBNA Corp. .............................................. 6,400 211,648 ----------- 1,775,613 ----------- DATA PROCESSING SERVICES--0.4% Automatic Data Processing, Inc. ......................... 8,200 357,110 ----------- DEPARTMENT STORES--1.1% Federated Department Stores, Inc. (b) ................... 7,800 309,660 Kohl's Corp. (b) ........................................ 6,700 469,536 May Department Stores Co. (The) ......................... 2,300 75,739 Sears, Roebuck and Co. .................................. 3,100 168,330 ----------- 1,023,265 ----------- DIVERSIFIED CHEMICALS--0.5% Dow Chemical Co. (The) .................................. 5,300 182,214 Du Pont (E.I.) de Nemours & Co. ......................... 4,000 177,600 Eastman Chemical Co. .................................... 2,800 131,320 ----------- 491,134 ----------- DIVERSIFIED COMMERCIAL SERVICES--0.4% Cendant Corp. (b) ....................................... 16,600 263,608 eBay, Inc. (b) .......................................... 2,100 129,402 ----------- 393,010 ----------- DIVERSIFIED FINANCIAL SERVICES--6.8% Ambac Financial Group, Inc. ............................. 4,100 275,520 American Express Co. .................................... 8,000 290,560 Citigroup, Inc. (c) ..................................... 64,800 2,511,000 E*TRADE Group, Inc. (b) ................................. 13,500 73,710 Edwards (A.G.), Inc. .................................... 700 27,209 Fannie Mae .............................................. 15,000 1,106,250 Freddie Mac ............................................. 5,700 348,840 Goldman Sachs Group, Inc. (The) ......................... 4,500 330,075 Legg Mason, Inc. ........................................ 1,400 69,076 Merrill Lynch & Co., Inc. ............................... 3,000 121,500 Morgan Stanley .......................................... 13,200 568,656 Prudential Financial, Inc. (b) .......................... 6,700 223,512 Schwab (Charles) Corp. (The) ............................ 26,900 301,280 State Street Corp. ...................................... 800 35,760 T.Rowe Price Group, Inc. ................................ 3,700 121,656 ----------- 6,404,604 ----------- DRUG RETAIL--0.5% CVS Corp. ............................................... 5,700 174,420 Walgreen Co. ............................................ 8,200 316,766 ----------- 491,186 ----------- SHARES VALUE -------- ----------- ELECTRIC UTILITIES--2.9% Ameren Corp. ............................................ 1,900 $ 81,719 American Electric Power Co., Inc. ....................... 2,600 104,052 Cinergy Corp. ........................................... 4,100 147,559 Constellation Energy Group, Inc. ........................ 4,700 137,898 Dominion Resources, Inc. ................................ 6,900 456,780 DTE Energy Co. .......................................... 4,900 218,736 Edison International (b) ................................ 1,100 18,700 Entergy Corp. ........................................... 8,400 356,496 FirstEnergy Corp. ....................................... 3,300 110,154 FPL Group, Inc. ......................................... 900 53,991 PG&E Corp. (b) .......................................... 15,700 280,873 Pinnacle West Capital Corp. ............................. 2,500 98,750 Potomac Electric Power Co. .............................. 1,800 38,664 Progress Energy, Inc. ................................... 6,300 327,663 Reliant Energy, Inc. .................................... 1,400 23,660 TXU Corp. ............................................... 1,100 56,705 Wisconsin Energy Corp. .................................. 3,200 80,864 Xcel Energy, Inc. ....................................... 5,700 95,589 ----------- 2,688,853 ----------- ELECTRICAL COMPONENTS & EQUIPMENT--0.4% Cooper Industries Ltd. Class A .......................... 1,700 66,810 Emerson Electric Co. .................................... 4,800 256,848 Rockwell Automation, Inc. ............................... 4,200 83,916 ----------- 407,574 ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS--0.1% Agilent Technologies, Inc. (b) .......................... 1,900 44,935 Gemstar-TV Guide International, Inc. (b) ................ 9,000 48,510 ----------- 93,445 ----------- ENVIRONMENTAL SERVICES--0.4% Waste Management, Inc. .................................. 13,700 356,885 ----------- FERTILIZERS & AGRICULTURAL CHEMICALS--0.0% Monsanto Co. ............................................ 1,100 19,580 ----------- FOOD DISTRIBUTORS--0.3% Sysco Corp. ............................................. 9,600 261,312 ----------- FOOD RETAIL--0.3% Albertson's, Inc. ....................................... 5,900 179,714 Kroger Co. (The) (b) .................................... 3,400 67,660 ----------- 247,374 ----------- FOOTWEAR--0.3% NIKE, Inc. Class B ...................................... 4,600 246,790 ----------- FOREST PRODUCTS--0.0% Weyerhaeuser Co. ........................................ 700 44,695 ----------- GAS UTILITIES--0.2% El Paso Corp. ........................................... 9,400 193,734 ----------- GENERAL MERCHANDISE STORES--3.0% Costco Wholesale Corp. (b) .............................. 1,300 50,206 Target Corp. ............................................ 13,800 525,780 Wal-Mart Stores, Inc. (c) ............................... 40,900 2,249,909 ----------- 2,825,895 ----------- HEALTH CARE DISTRIBUTORS & SERVICES--0.4% Cardinal Health, Inc. ................................... 4,600 282,486 McKesson Corp. .......................................... 1,400 45,780 Omnicare, Inc. .......................................... 1,300 34,138 ----------- 362,404 ----------- HEALTH CARE EQUIPMENT--1.8% Bard (C.R.), Inc. ....................................... 800 45,264 Baxter International, Inc. .............................. 8,400 373,380 Becton, Dickinson and Co. ............................... 7,100 244,595 Biomet, Inc. ............................................ 1,700 46,104
See Notes to Financial Statements 54 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES
SHARES VALUE -------- ----------- HEALTH CARE EQUIPMENT--CONTINUED Guidant Corp. (b) ....................................... 10,900 $ 329,507 Medtronic, Inc. ......................................... 7,900 338,515 St. Jude Medical, Inc. (b) .............................. 1,600 118,160 Stryker Corp. ........................................... 2,200 117,722 Zimmer Holdings, Inc. (b) ............................... 1,200 42,792 ----------- 1,656,039 ----------- HEALTH CARE FACILITIES--0.8% HCA, Inc. ............................................... 8,200 389,500 Tenet Healthcare Corp. (b) .............................. 4,600 329,130 ----------- 718,630 ----------- HOME IMPROVEMENT RETAIL--1.6% Home Depot, Inc. (The) .................................. 31,800 1,168,014 Lowe's Cos., Inc. ....................................... 8,500 385,900 ----------- 1,553,914 ----------- HOTELS, RESORTS & CRUISE LINES--0.5% Carnival Corp. .......................................... 11,000 304,590 Marriott International, Inc. Class A .................... 4,600 175,030 Starwood Hotels & Resorts Worldwide, Inc. ............... 1,000 32,890 ----------- 512,510 ----------- HOUSEHOLD APPLIANCES--0.1% Black & Decker Corp. (The) .............................. 2,800 134,960 ----------- HOUSEHOLD PRODUCTS--2.2% Colgate-Palmolive Co. ................................... 6,900 345,345 Procter & Gamble Co. (The) .............................. 19,000 1,696,700 ----------- 2,042,045 ----------- INDUSTRIAL CONGLOMERATES--3.9% General Electric Co. (c) ................................ 110,400 3,207,120 Tyco International Ltd. ................................. 33,400 451,234 ----------- 3,658,354 ----------- INDUSTRIAL GASES--0.7% Air Products and Chemicals, Inc. ........................ 6,300 317,961 Praxair, Inc. ........................................... 5,400 307,638 ----------- 625,599 ----------- INDUSTRIAL MACHINERY--0.8% Danaher Corp. ........................................... 2,000 132,700 Dover Corp. ............................................. 500 17,500 Eaton Corp. ............................................. 2,000 145,500 Illinois Tool Works, Inc. ............................... 1,200 81,960 Ingersoll-Rand Co. Class A .............................. 5,800 264,828 ITT Industries, Inc. .................................... 2,100 148,260 ----------- 790,748 ----------- INTEGRATED OIL & GAS--5.2% ChevronTexaco Corp. ..................................... 16,800 1,486,800 Conoco, Inc. ............................................ 12,400 344,720 Exxon Mobil Corp. ....................................... 76,100 3,114,012 Phillips Petroleum Co. .................................. 100 5,888 ----------- 4,951,420 ----------- INTEGRATED TELECOMMUNICATION SERVICES--3.6% ALLTEL Corp. ............................................ 1,400 65,800 AT&T Corp. .............................................. 34,100 364,870 BellSouth Corp. ......................................... 21,500 677,250 SBC Communications, Inc. ................................ 30,100 918,050 Sprint Corp. (FON Group) ................................ 12,100 128,381 Verizon Communications, Inc. ............................ 30,000 1,204,500 ----------- 3,358,851 ----------- SHARES VALUE -------- ----------- INTERNET SOFTWARE & SERVICES--0.1% BEA Systems, Inc. (b) ................................... 9,900 $ 94,149 KPMG Consulting, Inc. (b) ............................... 1,700 25,262 ----------- 119,411 ----------- IT CONSULTING & SERVICES--0.3% Computer Sciences Corp. (b) ............................. 2,600 124,280 Electronic Data Systems Corp. ........................... 4,700 174,605 ----------- 298,885 ----------- LEISURE PRODUCTS--0.4% Hasbro, Inc. ............................................ 4,900 66,444 Mattel, Inc. ............................................ 12,700 267,716 ----------- 334,160 ----------- LIFE & HEALTH INSURANCE--0.9% John Hancock Financial Services, Inc. ................... 1,900 66,880 Lincoln National Corp. .................................. 5,000 210,000 MetLife, Inc. ........................................... 7,600 218,880 Protective Life Corp. ................................... 900 29,790 Torchmark Corp. ......................................... 3,500 133,700 UnumProvident Corp. ..................................... 5,800 147,610 ----------- 806,860 ----------- MANAGED HEALTH CARE--0.8% Aetna, Inc. ............................................. 400 19,188 CIGNA Corp. ............................................. 4,900 477,358 WellPoint Health Networks, Inc. (b) ..................... 3,900 303,459 ----------- 800,005 ----------- MOTORCYCLE MANUFACTURERS--0.2% Harley-Davidson, Inc. ................................... 2,900 148,683 ----------- MOVIES & ENTERTAINMENT--1.7% AOL Time Warner, Inc. (b) ............................... 44,500 654,595 Fox Entertainment Group, Inc. Class A (b) ............... 2,400 52,200 Viacom, Inc. Class B (b) ................................ 18,400 816,408 Walt Disney Co. (The) ................................... 4,600 86,940 ----------- 1,610,143 ----------- MULTI-LINE INSURANCE--1.7% American International Group, Inc. ...................... 21,800 1,487,414 Hartford Financial Services Group, Inc. (The) ........... 2,300 136,781 ----------- 1,624,195 ----------- MULTI-UTILITIES & UNREGULATED POWER--0.1% Dynegy, Inc. Class A .................................... 11,300 81,360 Williams Cos., Inc. (The) ............................... 2,700 16,173 ----------- 97,533 ----------- NETWORKING EQUIPMENT--1.5% Brocade Communications Systems, Inc. (b) ................ 5,200 90,896 Cisco Systems, Inc. (b)(c) .............................. 96,000 1,339,200 ----------- 1,430,096 ----------- OIL & GAS DRILLING--0.3% Diamond Offshore Drilling, Inc. ......................... 4,300 122,550 Transocean, Inc. ........................................ 3,700 115,255 ----------- 237,805 ----------- OIL & GAS EQUIPMENT & SERVICES--0.5% Baker Hughes, Inc. ...................................... 9,500 316,255 Cooper Cameron Corp. (b) ................................ 3,800 183,996 ----------- 500,251 ----------- OIL & GAS EXPLORATION & PRODUCTION--0.7% Anadarko Petroleum Corp. ................................ 7,000 345,100 Devon Energy Corp. ...................................... 6,300 310,464 ----------- 655,564 -----------
See Notes to Financial Statements 55 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES
SHARES VALUE -------- ----------- OIL & GAS REFINING, MARKETING & TRANSPORTATION--0.0% Valero Energy Corp. ..................................... 500 $ 18,710 ----------- PACKAGED FOODS AND MEATS--0.7% Campbell Soup Co. ....................................... 500 13,830 Heinz (H.J.) Co. ........................................ 400 16,440 Hershey Foods Corp. ..................................... 1,100 68,750 Kellogg Co. ............................................. 7,900 283,294 Kraft Foods, Inc. Class A ............................... 7,900 323,505 ----------- 705,819 ----------- PAPER PACKAGING--0.1% Temple-Inland, Inc. ..................................... 1,700 98,362 ----------- PAPER PRODUCTS--0.2% Georgia-Pacific Corp. ................................... 6,700 164,686 ----------- PERSONAL PRODUCTS--0.7% Gillette Co. (The) ...................................... 20,800 704,496 ----------- PHARMACEUTICALS--9.0% Abbott Laboratories ..................................... 17,600 662,640 Allergan, Inc. .......................................... 400 26,700 Bristol-Myers Squibb Co. ................................ 6,800 174,760 Forest Laboratories, Inc. (b) ........................... 5,600 396,480 Johnson & Johnson ....................................... 30,100 1,573,026 Lilly (Eli) & Co. ....................................... 15,000 846,000 Merck & Co., Inc. ....................................... 16,900 855,816 Pfizer, Inc. ............................................ 61,800 2,163,000 Pharmacia Corp. ......................................... 12,600 471,870 Schering-Plough Corp. ................................... 5,300 130,380 Watson Pharmaceuticals, Inc. (b) ........................ 300 7,581 Wyeth ................................................... 22,800 1,167,360 ----------- 8,475,613 ----------- PROPERTY & CASUALTY INSURANCE--1.1% Allstate Corp. (The) .................................... 16,700 617,566 Chubb Corp. (The) ....................................... 2,800 198,240 MBIA, Inc. .............................................. 4,100 231,773 Travelers Property Casualty Corp. Class A (b) ........... 400 7,080 ----------- 1,054,659 ----------- PUBLISHING & PRINTING--0.9% Gannett Co., Inc. ....................................... 6,300 478,170 Knight-Ridder, Inc. ..................................... 500 31,475 Tribune Co. ............................................. 7,000 304,500 ----------- 814,145 ----------- RAILROADS--0.5% Burlington Northern Santa Fe Corp. ...................... 5,900 177,000 CSX Corp. ............................................... 3,200 112,160 GATX Corp. .............................................. 500 15,050 Norfolk Southern Corp. .................................. 1,500 35,070 Union Pacific Corp. ..................................... 2,700 170,856 ----------- 510,136 ----------- RESTAURANTS--0.6% McDonald's Corp. ........................................ 11,600 330,020 Yum! Brands, Inc. (b) ................................... 8,200 239,850 ----------- 569,870 ----------- SEMICONDUCTOR EQUIPMENT--0.4% Applied Materials, Inc. (b) ............................. 19,600 372,792 Teradyne, Inc. (b) ...................................... 1,300 30,550 ----------- 403,342 ----------- SEMICONDUCTORS--2.8% Agere Systems, Inc. Class A (b) ......................... 200 280 Agere Systems, Inc. Class B (b) ......................... 4,312 6,468 Altera Corp. (b) ........................................ 7,500 102,000 Analog Devices, Inc. (b) ................................ 2,700 80,190 SHARES VALUE -------- ----------- SEMICONDUCTORS--CONTINUED Applied Micro Circuits Corp. (b) ........................ 800 $ 3,784 Broadcom Corp. Class A (b) .............................. 3,400 59,636 Intel Corp. (c) ......................................... 71,800 1,311,786 Linear Technology Corp. ................................. 5,700 179,151 LSI Logic Corp. (b) ..................................... 9,100 79,625 Maxim Integrated Products, Inc. (b) ..................... 3,800 145,654 National Semiconductor Corp. (b) ........................ 100 2,917 PMC-Sierra, Inc. (b) .................................... 6,000 55,620 Texas Instruments, Inc. ................................. 19,700 466,890 Xilinx, Inc. (b) ........................................ 6,700 150,281 ----------- 2,644,282 ----------- SOFT DRINKS--2.9% Coca-Cola Co. (The) ..................................... 33,900 1,898,400 PepsiCo, Inc. ........................................... 16,800 809,760 ----------- 2,708,160 ----------- SPECIALTY CHEMICALS--0.4% PPG Industries, Inc. .................................... 5,100 315,690 Rohm & Haas Co. ......................................... 2,300 93,127 ----------- 408,817 ----------- SPECIALTY STORES--0.3% Bed Bath & Beyond, Inc. (b) ............................. 7,000 264,180 Pier 1 Imports, Inc. .................................... 2,700 56,700 ----------- 320,880 ----------- STEEL--0.1% Allegheny Technologies, Inc. ............................ 1,400 22,120 United States Steel Corp. ............................... 4,300 85,527 ----------- 107,647 ----------- SYSTEMS SOFTWARE--4.3% Microsoft Corp. (b) ..................................... 63,900 3,495,330 Oracle Corp. (b) ........................................ 55,400 524,638 VERITAS Software Corp. (b) .............................. 4,000 79,160 ----------- 4,099,128 ----------- TELECOMMUNICATIONS EQUIPMENT--0.7% Corning, Inc. (b) ....................................... 3,500 12,425 Motorola, Inc. .......................................... 34,000 490,280 QUALCOMM, Inc. (b) ...................................... 5,000 137,450 ----------- 640,155 ----------- TOBACCO--1.2% Philip Morris Cos., Inc. ................................ 26,300 1,148,784 ----------- TRADING COMPANIES & DISTRIBUTORS--0.2% Grainger (W.W.), Inc. ................................... 2,800 140,280 ----------- WIRELESS TELECOMMUNICATION SERVICES--0.5% AT&T Wireless Services, Inc. (b) ........................ 48,100 281,385 Sprint Corp. (PCS Group) (b) ............................ 39,200 175,224 ----------- 456,609 ----------- TOTAL COMMON STOCKS (Identified cost $105,974,096) ....................................... 90,974,191 ----------- FOREIGN COMMON STOCKS--1.9% ALUMINUM--0.3% Alcan, Inc. (Canada) .................................... 8,300 311,416 ----------- DIVERSIFIED METALS & MINING--0.1% Inco Ltd. (Canada) (b) .................................. 4,600 104,144 ----------- INTEGRATED OIL & GAS--0.7% Royal Dutch Petroleum Co. NY Registered Shares (Netherlands) ......................................... 11,600 641,132 -----------
See Notes to Financial Statements 56 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES
SHARES VALUE -------- ----------- PACKAGED FOODS AND MEATS--0.6% Unilever NV NY Registered Shares (Netherlands) .......... 8,800 $ 570,240 ----------- PROPERTY & CASUALTY INSURANCE--0.1% XL Capital Ltd. Class A (Bermuda) ....................... 1,500 127,050 ----------- TELECOMMUNICATIONS EQUIPMENT--0.1% Nortel Networks Corp. (Canada) (b) ...................... 49,000 71,050 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $1,758,710) ......................................... 1,825,032 ----------- TOTAL LONG TERM INVESTMENTS--98.5% (Identified cost $107,883,338) ....................................... 92,949,839 ----------- STANDARD PAR & POOR'S VALUE RATING (000) -------- ------- SHORT-TERM OBLIGATIONS--0.5% COMMERCIAL PAPER--0.5% Receivables Capital Corp. 1.90%, 7/1/02 ........... A-1+ $ 290 289,970 Ciesco LP 1.90%, 7/2/02 ........................... A-1+ 220 219,965 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $509,989) ........................................... 509,935 ----------- TOTAL INVESTMENTS--99.0% (Identified Cost $108,393,327) ....................................... 93,459,774(a) Other assets and liabilities, net--1.0% .............................. 939,965 ----------- NET ASSETS--100.0% ..................................................... $94,399,739 =========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $6,965,297 and gross depreciation of $23,300,324 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $109,794,801. (b) Non-income producing. (c) All or a portion segregated as collateral for futures.
See Notes to Financial Statements 57 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $108,393,327) ...................... $ 93,459,774 Receivables Fund shares sold ................................................................. 996,440 Investment securities sold ....................................................... 315,459 Dividends and interest ........................................................... 116,053 ------------ Total assets ................................................................... 94,887,726 ------------ LIABILITIES Cash overdraft ..................................................................... 363 Payables Investment securities purchased .................................................. 305,744 Fund shares repurchased .......................................................... 64,221 Variation margin for futures contracts ........................................... 1,409 Printing fee ..................................................................... 48,647 Investment advisory fee .......................................................... 29,238 Financial agent fee .............................................................. 10,488 Trustees' fee .................................................................... 3,717 Accrued expenses ................................................................... 24,160 ------------ Total liabilities .............................................................. 487,987 ------------ NET ASSETS ......................................................................... $ 94,399,739 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $125,028,859 Undistributed net investment income .............................................. 88,154 Accumulated net realized loss .................................................... (15,749,246) Net unrealized depreciation ...................................................... (14,968,028) ------------ NET ASSETS ......................................................................... $ 94,399,739 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 10,268,121 ============ Net asset value and offering price per share ....................................... $9.19 =====
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ........................................................................ $ 702,829 Interest ......................................................................... 9,446 Foreign taxes withheld ........................................................... (3,946) ------------ Total investment income ........................................................ 708,329 ------------ EXPENSES Investment advisory fee .......................................................... 231,912 Financial agent fee .............................................................. 63,074 Custodian ........................................................................ 25,739 Professional ..................................................................... 15,438 Printing ......................................................................... 13,927 Trustees ......................................................................... 3,455 Miscellaneous .................................................................... 5,067 ------------ Total expenses ................................................................. 358,612 Less expenses borne by investment adviser ...................................... (41,038) Custodian fees paid indirectly ................................................. (29) ------------ Net expenses ................................................................... 317,545 ------------ NET INVESTMENT INCOME .............................................................. 390,784 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................. (6,073,739) Net realized loss on futures contracts ........................................... (84,148) Net change in unrealized appreciation (depreciation) on investments .............. (10,196,480) ------------ NET LOSS ON INVESTMENTS ............................................................ (16,354,367) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $(15,963,583) ============
See Notes to Financial Statements 58 PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ------------ ------------ FROM OPERATIONS Net investment income (loss) ................................................................ $ 390,784 $ 849,371 Net realized gain (loss) .................................................................... (6,157,887) (8,870,974) Net change in unrealized appreciation (depreciation) ........................................ (10,196,480) (6,133,720) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................. (15,963,583) (14,155,323) ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ....................................................................... (406,291) (761,382) Net realized long-term gains ................................................................ -- (676,397) ------------ ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ................................... (406,291) (1,437,779) ------------ ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (1,886,931 and 3,167,536 shares, respectively) ................ 19,379,102 35,461,521 Net asset value of shares issued from reinvestment of distributions (40,955 and 129,170 shares, respectively) ..................................................................... 406,291 1,437,779 Cost of shares repurchased (1,415,227 and 2,833,213 shares, respectively) ................... (14,509,220) (31,437,657) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................... 5,276,173 5,461,643 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ....................................................... (11,093,701) (10,131,459) NET ASSETS Beginning of period ......................................................................... 105,493,440 115,624,899 ------------ ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $88,154 AND $103,661, RESPECTIVELY) ............................................................................. $ 94,399,739 $105,493,440 ============ ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS FROM ENDED YEAR ENDED DECEMBER 31, INCEPTION 6/30/02 ----------------------------------------- 7/15/97 TO (UNAUDITED) 2001(5) 2000 1999 1998 12/31/97 ----------- ------- ------ ------ ------ ---------- Net asset value, beginning of period ............... $10.81 $12.44 $14.64 $13.08 $10.49 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ..................... 0.04 0.09 0.11 0.12 0.12 0.05 Net realized and unrealized gain (loss) .......... (1.62) (1.57) (1.75) 2.33 3.19 0.54 ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ............... (1.58) (1.48) (1.64) 2.45 3.31 0.59 ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ............. (0.04) (0.08) (0.11) (0.12) (0.12) (0.05) Distributions from net realized gains ............ -- (0.07) (0.45) (0.77) (0.60) (0.05) ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS ............................ (0.04) (0.15) (0.56) (0.89) (0.72) (0.10) ------ ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE .......................... (1.62) (1.63) (2.20) 1.56 2.59 0.49 ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ..................... $ 9.19 $10.81 $12.44 $14.64 $13.08 $10.49 ====== ====== ====== ====== ====== ====== Total return ....................................... (14.64)%(3) (11.90)% (11.47)% 18.86% 31.68% 5.83%(3) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) .............. $94,400 $105,493 $115,625 $131,860 $69,522 $30,851 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (2) ........................... 0.62%(1)(4) 0.55%(4) 0.55% 0.55% 0.55% 0.55%(1) Net investment income ............................ 0.76%(1) 0.80% 0.80% 0.95% 1.08% 1.46%(1) Portfolio turnover ................................. 20%(3) 40% 63% 45% 45% 9%(3) (1) Annualized. (2) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.70%, 0.70%, 0.69%, 0.75%, 0.82% and 1.05% for the periods ended June 30, 2002, December 31, 2001, 2000, 1999, 1998 and 1997, respectively. (3) Not annualized. (4) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (5) As required, effective January 1, 2001, the Fund adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. There was no effect to net investment income per share and net realized and unrealized gain (loss) per share and the ratio of net investment income to average net assets. Per share ratios and supplemental data from prior periods have not been restated to reflect this change.
See Notes to Financial Statements 59 PHOENIX-JANUS FLEXIBLE INCOME SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------- ----------- U.S. GOVERNMENT SECURITIES--24.2% U.S. TREASURY BONDS--14.9% U.S. Treasury Bonds 7.25%, 5/15/16 ............. AAA $ 925 $ 1,090,164 U.S. Treasury Bonds 7.25%, 8/15/22 ............. AAA 580 690,874 U.S. Treasury Bonds 6.25%, 8/15/23 ............. AAA 1,525 1,633,926 U.S. Treasury Bonds 6.25%, 5/15/30 ............. AAA 560 606,616 U.S. Treasury Bonds 5.375%, 2/15/31 ............ AAA 658 644,326 ----------- 4,665,906 ----------- U.S. TREASURY NOTES--9.3% U.S. Treasury Notes 7.50%, 2/15/05 ............. AAA 100 110,703 U.S. Treasury Notes 3.50%, 11/15/06 ............ AAA 724 711,104 U.S. Treasury Notes 4.375%, 5/15/07 ............ AAA 564 571,755 U.S. Treasury Notes 6%, 8/15/09 ................ AAA 139 150,994 U.S. Treasury Notes 3.375%, 1/15/12 ............ AAA 120 122,982 U.S. Treasury Notes 4.875%, 2/15/12 ............ AAA 1,255 1,259,706 ----------- 2,927,244 ----------- TOTAL U.S. GOVERNMENT SECURITIES (Identified cost $7,514,057) ........................................... 7,593,150 ----------- AGENCY NON MORTGAGE-BACKED SECURITIES--12.9% Fannie Mae 3.875%, 3/15/05 ..................... AAA 1,915 1,932,467 Fannie Mae 6%, 12/15/05 ........................ AAA 280 298,989 Fannie Mae 6.25%, 2/1/11 ....................... AAA 700 735,812 Fannie Mae 6.625%, 11/15/30 .................... AAA 1,015 1,071,635 ----------- TOTAL AGENCY NON MORTGAGE-BACKED SECURITIES (Identified cost $3,968,689) ........................................... 4,038,903 ----------- CORPORATE BONDS--55.6% AEROSPACE & DEFENSE--1.5% Raytheon Co. 6.50%, 7/15/05 .................... BBB 200 209,763 Raytheon Co. 6.15%, 11/1/08 .................... BBB- 250 256,605 ----------- 466,368 ----------- AUTOMOBILE MANUFACTURERS--1.3% Ford Motor Credit Corp. 5.75%, 2/23/04 ......... BBB+ 250 253,584 General Motors Corp. 7.20%, 1/15/11 ............ BBB+ 150 152,764 ----------- 406,348 ----------- BANKS--0.7% Sovereign Bankcorp, Inc. 8.625%, 3/15/04 ....... BB+ 200 208,842 ----------- BREWERS--1.3% Coors Brewing Co. 144A 6.375%, 5/15/12 (b) .................................. BBB+ 410 421,890 ----------- BROADCASTING & CABLE TV--3.2% Charter Communications Holdings LLC 10.25%, 1/15/10 .............................. B+ 50 34,250 Clear Channel Communications, Inc. 6%, 11/1/06 ...................................... BBB- 21 19,897 Echostar DBS Corp. 144A 9.125%, 1/15/09 (b) .................................. B+ 155 142,600 Fox Liberty Networks LLC 8.875%, 8/15/07 ...................................... BBB- 400 412,000 Mediacom Broadband LLC 11%, 7/15/13 ............ B+ 200 188,000 Time Warner, Inc. 7.25%, 10/15/17 .............. BBB+ 220 198,642 ----------- 995,389 ----------- CASINOS & GAMING--0.5% Hard Rock Hotel, Inc. Series B 9.25%, 4/1/05 ....................................... B- 150 147,750 ----------- STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------- ----------- COMPUTER HARDWARE--0.8% Apple Computer, Inc. 6.50%, 2/15/04 ............ BB $ 248 $ 249,240 ----------- CONSUMER FINANCE--1.2% GMAC Series MTN 5.36%, 7/27/04 ................. BBB+ 250 254,583 Hertz Corp. 7.625%, 6/1/12 ..................... BBB 140 138,029 ----------- 392,612 ----------- DIVERSIFIED COMMERCIAL SERVICES--1.9% Aramark Services, Inc. 7%, 5/1/07 .............. BBB- 210 214,345 Cendant Corp. 6.875%, 8/15/06 .................. BBB 200 201,150 Cintas Corp. 144A 6%, 6/1/12 (b) ............... A 75 76,057 Science Applications International Corp. 144A 6.25%, 7/1/12 (b) ............................ A- 50 49,162 Science Applications International Corp. 144A 7.125%, 7/1/32 (b) ........................... A- 70 67,936 ----------- 608,650 ----------- DIVERSIFIED FINANCIAL SERVICES--4.8% General Electric Capital Corp. Series MTNA 6%, 6/15/12 .................................. AAA 195 194,075 Golden State Bancorp, Inc. 7%, 8/1/03 .......... BB+ 400 415,077 Golden State Bancorp, Inc. 7.125%, 8/1/05 ....................................... BB+ 400 427,489 Health Care Property Investors, Inc. 6.45%, 6/25/12 ...................................... BBB+ 110 109,600 Pemex Master Trust 144A 8.625%, 2/1/22 (b) ................................... BBB- 100 97,750 PHH Corp. 8.125%, 2/3/03 ....................... A- 250 253,444 ----------- 1,497,435 ----------- ELECTRIC UTILITIES--1.9% AmerenEnergy Generating 7.95%, 6/1/32 .......... BBB+ 90 93,912 Appalachian Power Co. 4.80%, 6/15/05 ........... BBB+ 80 79,630 Cinergy Corp. 6.25%, 9/1/04 .................... BBB+ 180 182,846 PSEG Power LLC 6.875%, 4/15/06 ................. BBB 175 181,228 PSEG Power LLC 144A 6.95%, 6/1/12 (b) .......... BBB 50 50,262 ----------- 587,878 ----------- ENVIRONMENTAL SERVICES--3.6% Republic Service, Inc. 6.75%, 8/15/11 .......... BBB 200 206,012 Waste Management, Inc. 7%, 10/1/04 ............. BBB 500 518,604 Waste Management, Inc. 7.375%, 8/1/10 .......... BBB 380 395,172 ----------- 1,119,788 ----------- FOOD RETAIL--3.9% Delhaize America, Inc. 7.375%, 4/15/06 ......... BBB- 95 98,777 Kroger Co. 7.375%, 3/1/05 ...................... BBB- 155 166,269 Kroger Co. 7.45%, 3/1/08 ....................... BBB- 425 467,279 Kroger Co. 7.50%, 4/1/31 ....................... BBB- 55 57,257 Safeway, Inc. 6.15%, 3/1/06 .................... BBB 205 215,531 Safeway, Inc. 6.50%, 3/1/11 .................... BBB 150 154,550 Winn-Dixie Stores, Inc. 8.875%, 4/1/08 ......... BB+ 70 70,350 ----------- 1,230,013 ----------- FOREST PRODUCTS--0.7% Weyerhauser Co. 144A 5.50%, 3/15/05 (b) ........ BBB 205 210,616 ----------- GAS UTILITIES--0.6% Southwest Gas Corp. 7.625%, 5/15/12 ............ BBB- 85 86,440 Teppco Partners LP 7.625%, 2/15/12 ............. BBB 100 102,693 ----------- 189,133 -----------
See Notes to Financial Statements 60 PHOENIX-JANUS FLEXIBLE INCOME SERIES
STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------- ----------- GENERAL MERCHANDISE STORES--0.9% Wal-Mart Stores, Inc. 6.875%, 8/10/09 .......... AA $ 250 $ 274,620 ----------- HEALTH CARE DISTRIBUTORS & SERVICES--1.5% Quest Diagnostic, Inc. 6.75%, 7/12/06 .......... BBB- 250 261,875 Quest Diagnostic, Inc. 7.50%, 7/12/11 .......... BBB- 195 211,896 ----------- 473,771 ----------- HEALTH CARE FACILITIES--6.6% Clarent Hospital Corp. 11.50%, 8/15/05 ......... NR 300 319,500 HCA, Inc. 6.91%, 6/15/05 ....................... BBB- 355 370,641 HCA, Inc. 6.95%, 5/1/12 ........................ BBB- 135 137,576 HEALTHSOUTH Corp. 7.375%, 10/1/06 .............. BBB- 300 301,500 HEALTHSOUTH Corp. 8.50%, 2/1/08 ................ BBB- 225 237,375 Tenet Healthcare Corp. 5.375%, 11/15/06 ........ BBB 400 404,231 Tenet Healthcare Corp. 6.375%, 12/1/11 ......... BBB 250 253,066 Vicar Operating, Inc. 8.75%, 12/1/09 ........... B- 60 63,300 ----------- 2,087,189 ----------- HOMEBUILDING--0.3% K. Hovanian Enterprises, Inc. 144A 8.875%, 4/1/12 (b) ................................... B 65 64,269 KB Home 8.625%, 12/15/08 ....................... BB- 45 45,675 ----------- 109,944 ----------- HOTELS, RESORTS & CRUISE LINES--0.3% Starwood Hotels & Resorts Worldwide, Inc. ...... 144A 7.375%, 5/1/07 (b) ...................... BBB- 100 98,375 ----------- HOUSEHOLD PRODUCTS--2.5% Dial Corp. (The) 7%, 8/15/06 ................... BBB- 280 293,061 Dial Corp. (The) 6.50%, 9/15/08 ................ BBB- 300 305,135 Procter and Gamble Co. 4.75%, 6/15/07 .......... AA 195 196,791 ----------- 794,987 ----------- INDUSTRIAL CONGLOMERATES--0.9% General Electric Capital Corp. Series MTNA 4.25%, 1/28/05 ............................... AAA 285 288,102 ----------- INDUSTRIAL MACHINERY--0.3% Kennametal, Inc. 7.20%, 6/15/12 ................ BBB 85 84,938 ----------- INSURANCE BROKERS--0.2% Marsh & McLennan Cos., Inc. 144A 6.25%, 3/15/12 (b) .................................. AA- 70 72,620 ----------- INTEGRATED OIL & GAS--2.0% Conoco Funding Co. 5.45%, 10/15/06 ............. BBB+ 340 340,000 Conoco Funding Co. 6.35%, 10/15/11 ............. BBB+ 155 160,699 Occidental Petroleum Corp. 5.875%, 1/15/07 ..... BBB 130 134,676 ----------- 635,375 ----------- LEISURE FACILITIES--0.8% Bally Total Fitness Holding Corp. Series D 9.875%, 10/15/07 ............................. B- 250 249,375 ----------- MANAGED HEALTH CARE--2.0% United Health Group, Inc. 7.50%, 11/15/05 ...... A 70 76,990 United Health Group, Inc. 5.20%, 1/17/07 ....... A 70 71,128 Wellpoint Health Network 6.375%, 6/15/06 ....... A- 455 479,047 ----------- 627,165 ----------- METAL & GLASS CONTAINERS--0.6% Owens-Brockway Glass Container, Inc. 144A 8.875%, 2/15/09 (b) .......................... BB 175 175,875 ----------- STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------- ----------- MOVIES & ENTERTAINMENT--2.1% AMC Entertainment, Inc. 144A 9.875%, 2/1/12 (b) ................................... CCC $ 45 $ 45,281 AOL Time Warner, Inc. 5.625%, 5/1/05 ........... BBB+ 290 284,551 Viacom, Inc. 6.40%, 1/30/06 .................... A- 300 316,684 ----------- 646,516 ----------- OIL & GAS EXPLORATION & PRODUCTION--0.9% Louis Dreyfus Natural Gas Corp. 6.875%, 12/1/07 ...................................... BBB+ 200 211,339 Magnum Hunter Resources, Inc. 144A 9.60%, 3/15/12 (b) .................................. B 60 62,100 ----------- 273,439 ----------- PACKAGED FOODS AND MEATS--2.8% Conagra Foods, Inc. 6.75%, 9/15/11 ............. BBB+ 175 184,662 General Mills, Inc. 6%, 2/15/12 ................ BBB+ 85 84,200 Hormel Foods Corp. 6.625%, 6/1/11 .............. A 150 156,178 Kellogg Co. Series B 6%, 4/1/06 ................ BBB 225 235,145 Kellogg Co. Series B 6.60%, 4/1/11 ............. BBB 200 209,712 ----------- 869,897 ----------- PUBLISHING & PRINTING--0.9% Gannett Co., Inc. 4.95%, 4/1/05 ................ A 265 270,352 ----------- RESTAURANTS--0.7% McDonalds Corp. Series MTNG 5.375%, 4/30/07 ...................................... A+ 150 155,335 Wendy's International, Inc. 6.20%, 6/15/14 ..... BBB+ 45 45,720 Yum! Brands, Inc. 7.70%, 7/1/12 ................ BB 25 25,125 ----------- 226,180 ----------- SOFT DRINKS--0.8% Coca Cola Enterprises, Inc. 6.125%, 8/15/11 ...................................... A 105 108,131 Coca Cola Enterprises, Inc. 7.125%, 8/1/17 ....................................... A 133 150,332 ----------- 258,463 ----------- WIRELESS TELECOMMUNICATION SERVICES--0.6% AT&T Wireless Services, Inc. 6.875%, 4/18/05 ...................................... BBB 220 195,800 ----------- TOTAL CORPORATE BONDS (Identified cost $17,100,009) .......................................... 17,444,935 ----------- FOREIGN GOVERNMENT SECURITIES--0.3% MEXICO--0.3% United Mexican States 7.50%, 1/14/12 ........... BBB- 105 103,793 ----------- TOTAL FOREIGN GOVERNMENT SECURITIES (Identified cost $105,054) ............................................. 103,793 ----------- FOREIGN CORPORATE BONDS--0.4% CANADA--0.4% Corus Entertainment, Inc. 144A 8.75%, 3/1/12 (b) ................................... B+ 90 90,450 Sysco International Corp. 144A 6.10%, 6/1/12 (b) ................................... AA- 40 41,317 ----------- TOTAL FOREIGN CORPORATE BONDS (Identified cost $129,158) ............................................. 131,767 -----------
See Notes to Financial Statements 61 PHOENIX-JANUS FLEXIBLE INCOME SERIES
STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------- ----------- CONVERTIBLE BONDS--2.5% COMPUTER STORAGE & PERIPHERALS--0.0% Candescent Technologies Corp. Cv. 144A 8%, 5/1/03 (b),(c),(d),(e) ....................... NA $ 50 $ 4,250 ----------- INTEGRATED TELECOMMUNICATION SERVICES--2.5% Verizon Global Funding Corp. 144A 4.25%, 9/15/05 (b) .................................. A+ 775 778,875 ----------- TOTAL CONVERTIBLE BONDS (Identified cost $823,078) ............................................. 783,125 ----------- TOTAL LONG-TERM INVESTMENTS--95.9% (Identified cost $29,640,045) .......................................... 30,095,673 ----------- SHORT-TERM OBLIGATIONS--1.3% COMMERCIAL PAPER--1.3% Prudential Insurance Co. of America 1.85%, 7/1/02 ................................ A-1 400 400,000 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $400,000) ............................................. 400,000 ----------- TOTAL INVESTMENTS--97.2% (Identified cost $30,040,045) .......................................... 30,495,673(a) Other assets and liabilities, net--2.8% ................................ 886,168 ----------- NET ASSETS--100.0% ....................................................... $31,381,841 =========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $671,451 and gross depreciation of $222,137 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $30,046,359. (b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2002, these securities amounted to a value of $2,549,685 or 8.1% of net assets. (c) Illiquid. Security valued at fair value as determined in good faith by or under the direction of the Trustees. At June 30, 2002, these securities amounted to $4,250 or 0.01% of net assets. (d) Non-income producing. (e) Security in default.
See Notes to Financial Statements 62 PHOENIX-JANUS FLEXIBLE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $30,040,045) ....................... $30,495,673 Cash ............................................................................... 95,508 Receivables Interest ......................................................................... 526,059 Investment securities sold ....................................................... 423,003 Fund shares sold ................................................................. 36,640 ----------- Total assets ................................................................... 31,576,883 ----------- LIABILITIES Payables Investment securities purchased .................................................. 74,669 Fund shares repurchased .......................................................... 58,565 Professional fee ................................................................. 19,471 Printing fee ..................................................................... 18,307 Investment advisory fee .......................................................... 13,979 Financial agent fee .............................................................. 5,539 Trustees' fee .................................................................... 3,717 Accrued expenses ................................................................... 795 ----------- Total liabilities .............................................................. 195,042 ----------- NET ASSETS ......................................................................... $31,381,841 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $31,093,167 Undistributed net investment income .............................................. 60,407 Accumulated net realized loss .................................................... (227,361) Net unrealized appreciation ...................................................... 455,628 ----------- NET ASSETS ......................................................................... $31,381,841 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 3,039,960 =========== Net asset value and offering price per share ....................................... $10.32 ======
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Interest ......................................................................... $ 921,166 --------- Total investment income ........................................................ 921,166 --------- EXPENSES Investment advisory fee .......................................................... 120,009 Financial agent fee .............................................................. 32,369 Professional ..................................................................... 14,787 Custodian ........................................................................ 7,534 Printing ......................................................................... 4,609 Trustees ......................................................................... 3,455 Miscellaneous .................................................................... 6,706 --------- Total expenses ................................................................. 189,469 Less expenses borne by investment adviser ...................................... (36,509) Custodian fees paid indirectly ................................................. (313) --------- Net expenses ................................................................... 152,647 --------- NET INVESTMENT INCOME .............................................................. 768,519 --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................. (157,952) Net change in unrealized appreciation (depreciation) on investments .............. 350,966 --------- NET GAIN ON INVESTMENTS ............................................................ 193,014 --------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $ 961,533 =========
See Notes to Financial Statements 63 PHOENIX-JANUS FLEXIBLE INCOME SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ----------- ----------- FROM OPERATIONS Net investment income (loss) ................................................................ $ 768,519 $ 1,035,171 Net realized gain (loss) .................................................................... (157,952) 313,577 Net change in unrealized appreciation (depreciation) ........................................ 350,966 (154,312) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................. 961,533 1,194,436 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ....................................................................... (724,493) (1,025,894) Net realized short-term gains ............................................................... -- (125,681) Net realized long-term gains ................................................................ -- (69,856) ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ................................... (724,493) (1,221,431) ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (1,147,982 and 1,804,732 shares, respectively) ................ 11,830,292 18,830,362 Net asset value of shares issued from reinvestment of distributions (70,691 and 119,019 shares, respectively) ..................................................................... 724,493 1,221,431 Cost of shares repurchased (793,760 and 552,536 shares, respectively) ....................... (8,198,429) (5,782,897) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................... 4,356,356 14,268,896 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS ....................................................... 4,593,396 14,241,901 NET ASSETS Beginning of period ......................................................................... 26,788,445 12,546,544 ----------- ----------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $60,407 AND $16,381, RESPECTIVELY) ............................................................................. $31,381,841 $26,788,445 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS YEAR ENDED ENDED DECEMBER 31, FROM INCEPTION 6/30/02 ---------------------- 12/15/99 TO (UNAUDITED) 2001(8) 2000 12/31/99 ----------- ------- ------ -------------- Net asset value, beginning of period ............................ $10.24 $10.09 $ 9.98 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .................................. 0.25 0.55(7) 0.53 0.02 Net realized and unrealized gain (loss) ....................... 0.07 0.17 0.10 (0.02) ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ............................ 0.32 0.72 0.63 -- ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .......................... (0.24) (0.49) (0.52) (0.02) Distributions from net realized gains ......................... -- (0.08) -- -- ------ ------ ------ ------ TOTAL DISTRIBUTIONS ......................................... (0.24) (0.57) (0.52) (0.02) ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ....................................... 0.08 0.15 0.11 (0.02) ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD .................................. $10.32 $10.24 $10.09 $ 9.98 ====== ====== ====== ====== Total return .................................................... 3.12%(2) 7.24% 6.43% 0.02%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ........................... $31,382 $26,788 $12,547 $5,232 RATIO TO AVERAGE NET ASSETS OF: Operating expenses ............................................ 1.02%(1)(4)(6) 0.95%(4)(6) 1.00%(4)(5) 0.95%(1)(3) Net investment income ......................................... 5.12%(1) 5.31% 6.63% 4.81%(1) Portfolio turnover .............................................. 160%(2) 305% 227% 0%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 8.18% for the period ended December 31, 1999. (4) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.26%, 1.51% and 2.47% for the periods ended June 30, 2002, December 31, 2001 and 2000, respectively. (5) For the year ended December 31, 2000, the ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees, if expense offsets were included, the ratio would have been 0.95%. (6) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees, if expense offsets were included, the ratio would not significantly differ. (7) Computed using average shares outstanding. (8) As required, effective January 1, 2001, the Fund adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. The effect of this change for the year ended December 31, 2001 was to decrease net investment income per share by $0.01, increase net realized and unrealized gains and losses per share by $0.01 and decrease the ratio of net investment income to average net assets from 5.41% to 5.31%. Per share ratios and supplemental data for prior periods have not been restated to reflect this change.
See Notes to Financial Statements 64 PHOENIX-JANUS GROWTH SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE -------- ----------- COMMON STOCKS--90.5% AEROSPACE & DEFENSE--2.9% Honeywell International, Inc. ........................... 58,635 $ 2,065,711 ----------- BANKS--5.5% Bank of New York Co., Inc. (The) ........................ 68,000 2,295,000 Washington Mutual, Inc. ................................. 42,805 1,588,494 ----------- 3,883,494 ----------- BIOTECHNOLOGY--4.1% Amgen, Inc. (b) ......................................... 17,030 713,216 Genentech, Inc. (b) ..................................... 64,490 2,160,415 ----------- 2,873,631 ----------- BREWERS--3.0% Anheuser-Busch Cos., Inc. ............................... 42,140 2,107,000 ----------- BROADCASTING & CABLE TV--6.2% Cablevision Systems Corp.-Rainbow Media Group Class A (b) ........................................... 37,560 328,650 Cablevision Systems New York Group Class A (b) .......... 50,785 480,426 Liberty Media Corp. Class A (b) ......................... 309,630 3,096,300 USA Interactive (b) ..................................... 19,970 468,297 ----------- 4,373,673 ----------- CASINOS & GAMING--1.9% MGM MIRAGE (b) .......................................... 38,625 1,303,594 ----------- CONSTRUCTION & ENGINEERING--1.8% Fluor Corp .............................................. 31,805 1,238,805 ----------- DATA PROCESSING SERVICES--2.0% Automatic Data Processing, Inc. ......................... 32,350 1,408,842 ----------- DIVERSIFIED FINANCIAL SERVICES--14.8% Citigroup, Inc. ......................................... 94,109 3,646,724 Fannie Mae .............................................. 40,825 3,010,844 Morgan Stanley .......................................... 37,795 1,628,208 Schwab (Charles) Corp. (The) ............................ 100,150 1,121,680 SLM Corp. ............................................... 9,980 967,062 ----------- 10,374,518 ----------- DRUG RETAIL--2.0% Walgreen Co. ............................................ 35,925 1,387,783 ----------- GENERAL MERCHANDISE STORES--2.2% Costco Wholesale Corp. (b) .............................. 39,340 1,519,311 ----------- HEALTH CARE DISTRIBUTORS & SERVICES--1.0% McKesson Corp. .......................................... 21,095 689,806 ----------- HOME IMPROVEMENT RETAIL--3.7% Home Depot, Inc. (The) .................................. 70,060 2,573,304 ----------- HOUSEHOLD PRODUCTS--1.7% Colgate-Palmolive Co. ................................... 23,430 1,172,671 ----------- INDUSTRIAL CONGLOMERATES--2.9% General Electric Co. .................................... 69,055 2,006,048 ----------- INSURANCE BROKERS--1.4% Marsh & McLennan Cos., Inc. ............................. 9,865 952,959 ----------- SHARES VALUE -------- ----------- MANAGED HEALTH CARE--3.3% WellPoint Health Networks, Inc. (b) ..................... 29,390 $ 2,286,836 ----------- MOTORCYCLE MANUFACTURERS--1.0% Harley-Davidson, Inc. ................................... 13,680 701,374 ----------- MOVIES & ENTERTAINMENT--6.0% AOL Time Warner, Inc. (b) ............................... 40,850 600,904 Metro-Goldwyn-Mayer, Inc. (b) ........................... 58,050 679,185 Viacom, Inc. Class B (b) ................................ 65,920 2,924,870 ----------- 4,204,959 ----------- OIL & GAS EXPLORATION & PRODUCTION--2.6% Anadarko Petroleum Corp. ................................ 36,625 1,805,612 ----------- PACKAGED FOODS AND MEATS--1.1% Heinz (H.J.) Co. ........................................ 18,645 766,309 ----------- PHARMACEUTICALS--8.4% Pfizer, Inc. ............................................ 97,828 3,423,980 Schering-Plough Corp. ................................... 38,400 944,640 Wyeth ................................................... 29,450 1,507,840 ----------- 5,876,460 ----------- PROPERTY & CASUALTY INSURANCE--0.5% Berkshire Hathaway, Inc. Class B (b) .................... 150 335,100 ----------- SEMICONDUCTOR EQUIPMENT--2.3% Applied Materials, Inc. (b) ............................. 83,190 1,582,274 ----------- SEMICONDUCTORS--2.6% Linear Technology Corp. ................................. 33,335 1,047,719 Texas Instruments, Inc. ................................. 33,070 783,759 ----------- 1,831,478 ----------- SYSTEMS SOFTWARE--5.3% Microsoft Corp. (b) ..................................... 54,225 2,966,107 Oracle Corp. (b) ........................................ 77,240 731,463 ----------- 3,697,570 ----------- TELECOMMUNICATIONS EQUIPMENT--0.3% Lucent Technologies, Inc. (b) ........................... 120,695 200,354 ----------- TOTAL COMMON STOCKS (Identified cost $79,199,048) ........................................ 63,219,476 ----------- FOREIGN COMMON STOCKS--5.2% AEROSPACE & DEFENSE--0.1% Bombardier, Inc. Class B (Canada) ....................... 7,186 59,533 ----------- AUTOMOBILE MANUFACTURERS--0.4% Bayerische Motoren Werke AG (Germany) ................... 7,196 296,715 ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS--1.1% Flextronics International Ltd. (Singapore) (b) .......... 109,950 783,943 ----------- SEMICONDUCTOR EQUIPMENT--1.6% ASML Holding NV (Netherlands) (b) ....................... 71,575 1,082,214 ----------- TELECOMMUNICATIONS EQUIPMENT--2.0% Nokia Oyj ADR (Finland) ................................. 96,845 1,402,316 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $8,235,645) ......................................... 3,624,721 -----------
See Notes to Financial Statements 65 PHOENIX-JANUS GROWTH SERIES
SHARES VALUE -------- ----------- FOREIGN PREFERRED STOCKS--0.3% AUTOMOBILE MANUFACTURERS--0.3% PORSCHE AG Pfd. (Germany) ............................... 520 $ 247,796 ----------- TOTAL FOREIGN PREFERRED STOCKS (Identified cost $152,352) ........................................... 247,796 ----------- CONVERTIBLE PREFERRED STOCKS--0.8% AUTOMOBILE MANUFACTURERS--0.6% Ford Motor Co. Cv. Pfd. 6.5% ............................ 4,970 279,563 General Motors Co. Series A Cv. Pfd. 4.5% ............... 5,550 143,412 ----------- 422,975 ----------- ELECTRIC UTILITIES--0.1% Reliant Energy, Inc. Cv. Pfd. 2% ........................ 1,720 43,017 ----------- PUBLISHING & PRINTING--0.1% Tribune Co. Cv. Pfd. 2% ................................. 980 63,945 ----------- TOTAL CONVERTIBLE PREFERRED STOCKS (Identified cost $632,435) ........................................... 529,937 ----------- STANDARD PAR & POOR'S VALUE RATING (000) -------- ------ AGENCY MORTGAGE-BACKED SECURITIES--0.1% Fannie Mae 4.75%, 11/14/03 ..................... AAA $ 65 67,008 ----------- TOTAL AGENCY MORTGAGE-BACKED SECURITIES (Identified cost $65,262) ............................................ 67,008 ----------- CORPORATE BONDS--0.1% BREWERS--0.0% Anheuser Busch 6%, 4/15/11 ..................... A+ 15 15,558 ----------- COMMODITY CHEMICALS--0.1% Lyondell Chemical, Inc. Series A 9.625%, 5/1/07 ....................................... BB 66 63,195 ----------- TOTAL CORPORATE BONDS (Identified cost $81,861) ............................................ 78,753 ----------- CONVERTIBLE BONDS--0.1% BROADCASTING & CABLE TV--0.1% Clear Channel Communications, Inc. Cv. 2.625%, 4/1/03 ............................... BBB- 98 92,365 ----------- TOTAL CONVERTIBLE BONDS (Identified cost $103,374) ........................................... 92,365 ----------- TOTAL LONG TERM INVESTMENTS--97.1% (Identified cost $88,469,977) ........................................ 67,860,056 ----------- STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------ ----------- SHORT-TERM OBLIGATIONS--3.0% COMMERCIAL PAPER--3.0% Prudential Insurance Co. of America 1.85%, 7/1/02 ....................................... A-1 $2,100 $ 2,100,000 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $2,100,000) ......................................... 2,100,000 ----------- TOTAL INVESTMENTS--100.1% (Identified Cost $90,569,977) ........................................ 69,960,056(a) Other assets and liabilities, net--(0.1)% ............................ (101,655) ----------- NET ASSETS--100.0% ..................................................... $69,858,401 =========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $2,249,534 and gross depreciation of $23,201,981 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $90,912,503. (b) Non-income producing.
See Notes to Financial Statements 66 PHOENIX-JANUS GROWTH SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $90,569,977) ....................... $ 69,960,056 Cash ............................................................................... 86,382 Receivables Investment securities sold ....................................................... 888,261 Fund shares sold ................................................................. 36,713 Dividends and interest ........................................................... 29,189 Prepaid expenses ................................................................... 18 ------------ Total assets ................................................................... 71,000,619 ------------ LIABILITIES Payables Investment securities purchased .................................................. 822,728 Fund shares repurchased .......................................................... 115,660 Printing fee ..................................................................... 114,929 Investment advisory fee .......................................................... 48,933 Professional fee ................................................................. 23,813 Financial agent fee .............................................................. 9,001 Trustees' fee .................................................................... 4,224 Accrued expenses ................................................................... 2,930 ------------ Total liabilities .............................................................. 1,142,218 ------------ NET ASSETS ......................................................................... $ 69,858,401 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $118,520,964 Accumulated net investment loss .................................................. (76,494) Accumulated net realized loss .................................................... (27,976,224) Net unrealized depreciation ...................................................... (20,609,845) ------------ NET ASSETS ......................................................................... $ 69,858,401 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 12,359,017 ============ Net asset value and offering price per share ....................................... $5.65 =====
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ........................................................................ $ 301,556 Interest ......................................................................... 27,459 Foreign taxes withheld ........................................................... (4,752) ------------ Total investment income ........................................................ 324,263 ------------ EXPENSES Investment advisory fee .......................................................... 319,165 Financial agent fee .............................................................. 51,461 Professional ..................................................................... 14,941 Printing ......................................................................... 11,956 Custodian ........................................................................ 8,975 Trustees ......................................................................... 3,495 Miscellaneous .................................................................... 4,784 ------------ Total expenses ................................................................. 414,777 Less expenses borne by investment adviser ...................................... (14,020) ------------ Net expenses ................................................................... 400,757 ------------ NET INVESTMENT LOSS ................................................................ (76,494) ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................. (6,425,856) Net change in unrealized appreciation (depreciation) on investments ....................................... (12,507,081) Net change in unrealized appreciation (depreciation) on foreign currency and foreign currency transactions ................................................... 38 ------------ NET LOSS ON INVESTMENTS ............................................................ (18,932,899) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $(19,009,393) ============
See Notes to Financial Statements 67 PHOENIX-JANUS GROWTH SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ------------ ------------ FROM OPERATIONS Net investment income (loss) ................................................................ $ (76,494) $ (177,090) Net realized gain (loss) .................................................................... (6,425,856) (19,633,207) Net change in unrealized appreciation (depreciation) ........................................ (12,507,043) (53,121) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................. (19,009,393) (19,863,418) ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ....................................................................... -- -- ------------ ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ................................... -- -- ------------ ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (2,195,238 and 5,787,397 shares, respectively) ................ 14,642,267 46,048,090 Net asset value of shares issued in conjunction with Plan of Reorganization (3,141,426 and 0 shares, respectively) (See Note 9) ...................................................... 22,032,065 -- Cost of shares repurchased (2,574,667 and 3,580,790 shares, respectively) ................... (16,549,583) (26,949,606) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................... 20,124,749 19,098,484 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ....................................................... 1,115,356 (764,934) NET ASSETS Beginning of period ......................................................................... 68,743,045 69,507,979 ------------ ------------ END OF PERIOD (INCLUDING ACCUMULATED NET INVESTMENT LOSS OF ($76,494) AND $0, RESPECTIVELY) . $ 69,858,401 $ 68,743,045 ============ ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS YEAR ENDED ENDED DECEMBER 31, FROM INCEPTION 6/30/02 ------------------- 12/15/99 TO (UNAUDITED) 2001 2000 12/31/99 ------------- ------ ------ --------------- Net asset value, beginning of period $ 7.16 $ 9.41 $10.60 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (0.01) (0.02)(5) 0.01 0.01 Net realized and unrealized gain (loss) (1.50) (2.23) (1.19) 0.59 ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS (1.51) (2.25) (1.18) 0.60 ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income -- -- (0.01) -- ------ ------ ------ ------ TOTAL DISTRIBUTIONS -- -- (0.01) -- ------ ------ ------ ------ CHANGE IN NET ASSET VALUE (1.51) (2.25) (1.19) 0.60 ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 5.65 $ 7.16 $ 9.41 $10.60 ====== ====== ====== ====== Total return (21.08)%(2) (23.84)% (11.17)% 6.00%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $69,858 $68,743 $69,508 $3,275 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) 1.07%(1) 1.00%(4) 1.00% 1.00%(1) Net investment income (0.20)%(1) (0.26)% 0.15% 1.61%(1) Portfolio turnover 37%(2) 35% 16% 0%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.10%, 1.19%, 1.24% and 17.29% for the periods ended June 30, 2002, December 31, 2001, 2000 and 1999, respectively. (4) For the period ended December 31, 2001 the ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees, if expense offsets were included, the ratio would not significantly differ. (5) Computed using average shares outstanding.
See Notes to Financial Statements 68 PHOENIX-MFS INVESTORS GROWTH STOCK SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE ------ ---------- COMMON STOCKS--91.4% ADVERTISING--0.1% Omnicom Group, Inc. .................................. 110 $ 5,038 ---------- AEROSPACE & DEFENSE--3.4% General Dynamics Corp. ............................... 140 14,889 Lockheed Martin Corp. ................................ 580 40,310 Northrop Grumman Corp. ............................... 910 113,750 ---------- 168,949 ---------- AIR FREIGHT & COURIERS--2.2% FedEx Corp. .......................................... 750 40,050 United Parcel Service, Inc. Class B .................. 1,070 66,072 ---------- 106,122 ---------- AIRLINES--0.3% Southwest Airlines Co. ............................... 770 12,443 ---------- APPAREL RETAIL--0.5% TJX Cos., Inc. (The) ................................. 1,290 25,297 ---------- APPLICATION SOFTWARE--1.9% Cadence Design Systems, Inc. (b) ..................... 1,290 20,795 Electronic Arts, Inc. (b) ............................ 200 13,210 Intuit, Inc. (b) ..................................... 530 26,352 PeopleSoft, Inc. (b) ................................. 2,130 31,694 Rational Software Corp. (b) .......................... 20 164 ---------- 92,215 ---------- BIOTECHNOLOGY--1.9% Amgen, Inc. (b) ...................................... 1,800 75,384 Genzyme Corp. (b) .................................... 550 10,582 MedImmune, Inc. (b) .................................. 330 8,712 ---------- 94,678 ---------- BROADCASTING & CABLE TV--1.6% Clear Channel Communications, Inc. (b) ............... 1,630 52,192 Univision Communications, Inc. Class A (b) ........... 330 10,362 USA Interactive (b) .................................. 460 10,787 Westwood One, Inc. (b) ............................... 130 4,345 ---------- 77,686 ---------- COMPUTER & ELECTRONICS RETAIL--0.4% Best Buy Co., Inc. (b) ............................... 530 19,239 ---------- COMPUTER HARDWARE--1.7% Dell Computer Corp. (b) .............................. 2,150 56,201 International Business Machines Corp. ................ 370 26,640 ---------- 82,841 ---------- COMPUTER STORAGE & PERIPHERALS--0.2% EMC Corp. (b) ........................................ 1,100 8,305 ---------- CONSUMER FINANCE--1.6% Capital One Financial Corp. .......................... 1,310 79,975 ---------- DATA PROCESSING SERVICES--2.8% Automatic Data Processing, Inc. ...................... 210 9,145 First Data Corp. ..................................... 3,390 126,108 ---------- 135,253 ---------- DEPARTMENT STORES--0.8% Kohl's Corp. (b) ..................................... 570 39,946 ---------- DIVERSIFIED COMMERCIAL SERVICES--0.6% eBay, Inc. (b) ....................................... 490 30,194 ---------- SHARES VALUE ------ ---------- DIVERSIFIED FINANCIAL SERVICES--4.5% American Express Co. ................................. 1,090 $ 39,589 Citigroup, Inc. ...................................... 160 6,200 Freddie Mac .......................................... 1,100 67,320 Goldman Sachs Group, Inc. (The) ...................... 980 71,883 Merrill Lynch & Co., Inc. ............................ 930 37,665 ---------- 222,657 ---------- DRUG RETAIL--0.7% Walgreen Co. ......................................... 920 35,540 ---------- FOOD DISTRIBUTORS--0.6% Sysco Corp. .......................................... 1,100 29,942 ---------- FOOTWEAR--0.1% NIKE, Inc. Class B ................................... 90 4,828 ---------- GENERAL MERCHANDISE STORES--4.1% Target Corp. ......................................... 1,160 44,196 Wal-Mart Stores, Inc. ................................ 2,890 158,979 ---------- 203,175 ---------- HEALTH CARE EQUIPMENT--2.2% Baxter International, Inc. ........................... 1,710 76,010 Medtronic, Inc. ...................................... 640 27,424 Stryker Corp. ........................................ 100 5,351 ---------- 108,785 ---------- HEALTH CARE FACILITIES--2.4% HCA, Inc. ............................................ 770 36,575 Tenet Healthcare Corp. (b) ........................... 1,140 81,567 ---------- 118,142 ---------- HOME IMPROVEMENT RETAIL--2.9% Home Depot, Inc. (The) ............................... 720 26,446 Lowe's Cos., Inc. .................................... 2,500 113,500 ---------- 139,946 ---------- HOTELS, RESORTS & CRUISE LINES--0.5% Carnival Corp. ....................................... 920 25,475 ---------- HOUSEHOLD PRODUCTS--1.2% Estee Lauder Cos., Inc. (The) Class A ................ 50 1,760 Procter & Gamble Co. (The) ........................... 660 58,938 ---------- 60,698 ---------- INDUSTRIAL CONGLOMERATES--4.8% 3M Co. ............................................... 900 110,700 General Electric Co. ................................. 3,960 115,038 Tyco International Ltd. .............................. 710 9,592 ---------- 235,330 ---------- INDUSTRIAL GASES--0.8% Praxair, Inc. ........................................ 660 37,600 ---------- INDUSTRIAL MACHINERY--3.0% Danaher Corp. ........................................ 950 63,033 Illinois Tool Works, Inc. ............................ 970 66,251 SPX Corp. ............................................ 130 15,275 ---------- 144,559 ---------- LIFE & HEALTH INSURANCE--0.3% AFLAC, Inc. .......................................... 410 13,120 ---------- MANAGED HEALTH CARE--2.2% Anthem, Inc. (b) ..................................... 220 14,846 UnitedHealth Group, Inc. ............................. 1,040 95,212 ---------- 110,058 ----------
See Notes to Financial Statements 69 PHOENIX-MFS INVESTORS GROWTH STOCK SERIES
SHARES VALUE ------ ---------- MOTORCYCLE MANUFACTURERS--1.8% Harley-Davidson, Inc. ................................ 1,750 $ 89,723 ---------- MOVIES & ENTERTAINMENT--4.1% Viacom, Inc. Class B (b) ............................. 3,930 174,374 Walt Disney Co. (The) ................................ 1,450 27,405 ---------- 201,779 ---------- MULTI-LINE INSURANCE--2.2% American International Group, Inc. ................... 1,610 109,850 ---------- NETWORKING EQUIPMENT--3.0% Brocade Communications Systems, Inc. (b) ............. 1,500 26,220 Cisco Systems, Inc. (b) .............................. 8,220 114,669 Emulex Corp. (b) ..................................... 330 7,428 ---------- 148,317 ---------- OIL & GAS DRILLING--0.3% GlobalSantaFe Corp. .................................. 460 12,581 ---------- OIL & GAS EQUIPMENT & SERVICES--1.4% Baker Hughes, Inc. ................................... 1,470 48,936 BJ Services Co. (b) .................................. 510 17,279 ---------- 66,215 ---------- OIL & GAS EXPLORATION & PRODUCTION--0.7% Apache Corp. ......................................... 210 12,071 Devon Energy Corp. ................................... 450 22,176 ---------- 34,247 ---------- PACKAGED FOODS AND MEATS--0.0% J.M. Smucker Co. (The) ............................... 6 205 ---------- PERSONAL PRODUCTS--1.9% Avon Products, Inc. .................................. 1,760 91,942 ---------- PHARMACEUTICALS--9.7% Forest Laboratories, Inc. (b) ........................ 630 44,604 Johnson & Johnson .................................... 1,760 91,978 Lilly (Eli) & Co. .................................... 1,010 56,964 Pfizer, Inc. ......................................... 5,970 208,950 Pharmacia Corp. ...................................... 290 10,860 Wyeth ................................................ 1,180 60,416 ---------- 473,772 ---------- PROPERTY & CASUALTY INSURANCE--0.6% Chubb Corp. (The) .................................... 400 28,320 ---------- RESTAURANTS--0.9% Yum! Brands, Inc. (b) ................................ 1,500 43,875 ---------- SEMICONDUCTOR EQUIPMENT--0.5% Applied Materials, Inc. (b) .......................... 640 12,173 KLA-Tencor Corp. (b) ................................. 270 11,877 ---------- 24,050 ---------- SEMICONDUCTORS--3.4% Analog Devices, Inc. (b) ............................. 890 26,433 Intel Corp. .......................................... 990 18,087 Linear Technology Corp. .............................. 1,000 31,430 Microchip Technology, Inc. (b) ....................... 970 26,607 Micron Technology, Inc. (b) .......................... 1,020 20,625 QLogic Corp. (b) ..................................... 290 11,049 Texas Instruments, Inc. .............................. 430 10,191 Xilinx, Inc. (b) ..................................... 970 21,757 ---------- 166,179 ---------- SOFT DRINKS--2.8% Pepsi Bottling Group, Inc. (The) ..................... 900 27,720 PepsiCo, Inc. ........................................ 2,290 110,378 ---------- 138,098 ---------- SHARES VALUE ------ ---------- SYSTEMS SOFTWARE--6.5% Adobe Systems, Inc. .................................. 1,140 $ 32,490 Microsoft Corp. (b) .................................. 3,670 200,749 Oracle Corp. (b) ..................................... 5,150 48,771 VERITAS Software Corp. (b) ........................... 1,860 36,809 ---------- 318,819 ---------- TOBACCO--1.3% Philip Morris Cos., Inc. ............................. 1,500 65,520 ---------- TOTAL COMMON STOCKS (Identified cost $4,712,878) .................................... 4,481,528 ---------- FOREIGN COMMON STOCKS--5.2% APPLICATION SOFTWARE--0.2% SAP AG (Germany) ..................................... 80 7,901 ---------- BREWERS--0.8% Diageo plc (United Kingdom) .......................... 2,970 38,572 ---------- BROADCASTING & CABLE TV--0.3% News Corp. Ltd. (The) (Australia) .................... 2,852 15,498 ---------- HEALTH CARE EQUIPMENT--0.5% Alcon, Inc. (Switzerland) (b) ........................ 770 26,372 ---------- MOVIES & ENTERTAINMENT--0.3% News Corp. Ltd. (The) ADR (Australia) ............... 550 12,612 ---------- OIL & GAS DRILLING--0.4% Noble Corp. (Cayman Islands) (b) ..................... 530 20,458 ---------- PACKAGED FOODS AND MEATS--0.2% Unilever plc (United Kingdom) ........................ 1,360 12,397 ---------- PHARMACEUTICALS--0.3% Sanofi-Synthelabo SA (France) ........................ 240 14,601 ---------- PROPERTY & CASUALTY INSURANCE--1.6% ACE Ltd. (Bermuda) ................................... 730 23,068 XL Capital Ltd. Class A (Bermuda) .................... 640 54,208 ---------- 77,276 ---------- SEMICONDUCTORS--0.6% Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan) (b) ................................... 2,364 30,732 ---------- TOTAL FOREIGN COMMON STOCKS (Identified cost $279,559) ...................................... 256,419 ---------- TOTAL LONG TERM INVESTMENTS--96.6% (Identified cost $4,992,437) .................................... 4,737,947 ---------- STANDARD PAR & POOR'S VALUE RATING (000) -------- ------ SHORT-TERM OBLIGATIONS--5.0% FEDERAL AGENCY SECURITIES--5.0% Fannie Mae 1.90%, 7/1/02 ..................... AAA $245 245,000 ---------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $245,000) ...................................... 245,000 ---------- TOTAL INVESTMENTS--101.6% (Identified cost $5,237,437) .................................... 4,982,947(a) Other assets and liabilities, net--(1.6)% ....................... (77,226) ---------- NET ASSETS--100.0% ................................................ $4,905,721 ========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $163,190 and gross depreciation of $595,729 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $5,415,486. (b) Non-income producing.
See Notes to Financial Statements 70 PHOENIX-MFS INVESTORS GROWTH STOCK SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $5,237,437) ........................ $4,982,947 Cash ............................................................................... 81,405 Foreign currency at value (Identified cost $1,868) ................................. 1,866 Receivables Investment securities sold ....................................................... 155,841 Fund shares sold ................................................................. 5,727 Receivable from adviser .......................................................... 8,012 Dividends ........................................................................ 2,484 Tax reclaim ...................................................................... 33 ---------- Total assets ................................................................... 5,238,315 ---------- LIABILITIES Payables Investment securities purchased .................................................. 297,791 Fund shares repurchased .......................................................... 2,746 Professional fee ................................................................. 21,733 Financial agent fee .............................................................. 3,731 Trustees' fee .................................................................... 1,721 Accrued expenses ................................................................... 4,872 ---------- Total liabilities .............................................................. 332,594 ---------- NET ASSETS ......................................................................... $4,905,721 ========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $5,587,620 Accumulated net investment loss .................................................. (4,141) Accumulated net realized loss .................................................... (423,272) Net unrealized depreciation ...................................................... (254,486) ---------- NET ASSETS ......................................................................... $4,905,721 ========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 558,602 ========== Net asset value and offering price per share ....................................... $8.78 =====
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ................................................................................................. $ 14,975 Interest .................................................................................................. 1,971 Foreign taxes withheld .................................................................................... (180) --------- Total investment income ................................................................................. 16,766 --------- EXPENSES Investment advisory fee ................................................................................... 16,421 Financial agent fee ....................................................................................... 21,886 Custodian ................................................................................................. 17,244 Professional .............................................................................................. 16,185 Printing .................................................................................................. 3,789 Trustees .................................................................................................. 3,455 Miscellaneous ............................................................................................. 2,834 --------- Total expenses .......................................................................................... 81,814 Less expenses borne by investment adviser ............................................................... (60,611) Custodian fees paid indirectly .......................................................................... (1) --------- Net expenses ............................................................................................ 21,202 --------- NET INVESTMENT INCOME ....................................................................................... (4,436) --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ........................................................................... (411,082) Net realized loss on foreign currency transaction ......................................................... (98) Net change in unrealized appreciation (depreciation) on investments ....................................... (479,010) Net change in unrealized appreciation (depreciation) on foreign currency and foreign currency transactions. 4 --------- NET LOSS ON INVESTMENTS ..................................................................................... (890,186) --------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................................................ $(894,622) =========
See Notes to Financial Statements 71 PHOENIX-MFS INVESTORS GROWTH STOCK SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED FROM INCEPTION 6/30/02 10/29/01 TO (UNAUDITED) 12/31/01 ---------- -------------- FROM OPERATIONS Net investment income (loss) ................................................................ $ (4,436) $ 117 Net realized gain (loss) .................................................................... (411,180) (11,249) Net change in unrealized appreciation (depreciation) ........................................ (479,006) 224,520 ---------- ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................. (894,622) 213,388 ---------- ---------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net realized gains .......................................................................... (665) -- ---------- ---------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ................................... (665) -- ---------- ---------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (210,718 and 368,506 shares, respectively) .................... 2,063,084 3,725,658 Net asset value of shares issued from reinvestment of distributions (75 and 0 shares, respectively) ............................................................................. 665 -- Cost of shares repurchased (20,282 and 415 shares, respectively) ............................ (197,390) (4,397) ---------- ---------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................... 1,866,359 3,721,261 ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS ....................................................... 971,072 3,934,649 NET ASSETS Beginning of period ......................................................................... 3,934,649 -- ---------- ---------- END OF PERIOD (INCLUDING ACCUMULATED NET INVESTMENT LOSS OF ($4,141) AND UNDISTRIBUTED NET INVESTMENT INCOME OF $295, RESPECTIVELY) .............................................. $4,905,721 $3,934,649 ========== ==========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED FROM INCEPTION 6/30/02 10/29/01 TO (UNAUDITED) 12/31/01 ----------- -------------- Net asset value, beginning of period ........................................................ $10.69 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .............................................................. (0.01) --(4) Net realized and unrealized gain (loss) ................................................... (1.90) 0.69 ------ ------ TOTAL FROM INVESTMENT OPERATIONS ........................................................ (1.91) 0.69 ------ ------ LESS DISTRIBUTIONS Distributions from net realized gains ..................................................... --(4) -- ------ ------ CHANGE IN NET ASSET VALUE ................................................................... (1.91) 0.69 ------ ------ NET ASSET VALUE, END OF PERIOD .............................................................. $ 8.78 $10.69 ====== ====== Total return ................................................................................ (17.83)%(3) 6.89%(3) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ..................................................... $4,906 $3,935 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) ..................................................................... 0.97%(2)(5) 0.95%(2)(5) Net investment income (loss) .............................................................. (0.20)%(2) 0.02%(2) Portfolio turnover rate ..................................................................... 92%(3) 34%(3) (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 3.74% and 6.88% for the periods ended June 30, 2002 and December 31, 2001, respectively. (2) Annualized. (3) Not annualized. (4) Amount is less than $0.01. (5) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 72 PHOENIX-MFS INVESTORS TRUST SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE ------ ---------- COMMON STOCKS--90.5% AEROSPACE & DEFENSE--0.9% General Dynamics Corp. ............................... 60 $ 6,381 Lockheed Martin Corp. ................................ 60 4,170 Northrop Grumman Corp. ............................... 170 21,250 ---------- 31,801 ---------- AIR FREIGHT & COURIERS--0.8% FedEx Corp. .......................................... 140 7,476 United Parcel Service, Inc. Class B .................. 330 20,377 ---------- 27,853 ---------- ALUMINUM--0.9% Alcoa, Inc. .......................................... 970 32,155 ---------- APPLICATION SOFTWARE--0.3% PeopleSoft, Inc. (b) ................................. 395 5,878 Rational Software Corp. (b) .......................... 200 1,642 Siebel Systems, Inc. (b) ............................. 200 2,844 ---------- 10,364 ---------- BANKS--6.0% Bank of America Corp. ................................ 860 60,510 Bank of New York Co., Inc. (The) ..................... 300 10,125 Charter One Financial, Inc. .......................... 300 10,314 Comerica, Inc. ....................................... 340 20,876 FleetBoston Financial Corp. .......................... 870 28,145 Mellon Financial Corp. ............................... 660 20,744 SunTrust Banks, Inc. ................................. 70 4,740 U.S. Bancorp ......................................... 410 9,574 Wachovia Corp. ....................................... 130 4,963 Wells Fargo & Co. .................................... 790 39,547 ---------- 209,538 ---------- BREWERS--0.9% Anheuser-Busch Cos., Inc. ............................ 640 32,000 ---------- BROADCASTING & CABLE TV--0.7% Clear Channel Communications, Inc. (b) ............... 470 15,050 Comcast Corp. Class A (b) ............................ 130 3,099 EchoStar Communications Corp. Class A (b) ............ 100 1,856 Univision Communications, Inc. Class A (b) ........... 100 3,140 ---------- 23,145 ---------- COMPUTER HARDWARE--2.8% Dell Computer Corp. (b) .............................. 710 18,559 Hewlett-Packard Co. .................................. 926 14,149 International Business Machines Corp. ................ 860 61,920 Sun Microsystems, Inc. (b) ........................... 350 1,754 ---------- 96,382 ---------- COMPUTER STORAGE & PERIPHERALS--0.3% EMC Corp. (b) ........................................ 630 4,757 Lexmark International, Inc. (b) ...................... 110 5,984 ---------- 10,741 ---------- CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS--0.6% Caterpillar, Inc. .................................... 160 7,832 Deere & Co. .......................................... 280 13,412 ---------- 21,244 ---------- CONSUMER FINANCE--0.6% Capital One Financial Corp. .......................... 330 20,147 ---------- SHARES VALUE ------ ---------- DATA PROCESSING SERVICES--1.8% Automatic Data Processing, Inc. ...................... 410 $ 17,856 Concord EFS, Inc. (b) ................................ 280 8,439 First Data Corp. ..................................... 940 34,968 ---------- 61,263 ---------- DEPARTMENT STORES--1.3% Sears, Roebuck and Co. ............................... 860 46,698 ---------- DIVERSIFIED CHEMICALS--0.1% Du Pont (E.I.) de Nemours & Co. ...................... 110 4,884 ---------- DIVERSIFIED COMMERCIAL SERVICES--0.1% Cendant Corp. (b) .................................... 140 2,223 ---------- DIVERSIFIED FINANCIAL SERVICES--8.7% American Express Co. ................................. 430 15,617 Citigroup, Inc. ...................................... 2,140 82,925 Fannie Mae ........................................... 540 39,825 Freddie Mac .......................................... 1,380 84,456 Goldman Sachs Group, Inc. (The) ...................... 320 23,472 J.P. Morgan Chase & Co. .............................. 90 3,053 Merrill Lynch & Co., Inc. ............................ 680 27,540 Morgan Stanley ....................................... 270 11,632 State Street Corp. ................................... 300 13,410 ---------- 301,930 ---------- DRUG RETAIL--0.4% CVS Corp. ............................................ 200 6,120 Walgreen Co. ......................................... 230 8,885 ---------- 15,005 ---------- ELECTRIC UTILITIES--1.0% Dominion Resources, Inc. ............................. 220 14,564 Exelon Corp. ......................................... 330 17,259 PG&E Corp. (b) ....................................... 220 3,936 ---------- 35,759 ---------- ELECTRICAL COMPONENTS & EQUIPMENT--0.1% Molex, Inc. .......................................... 70 2,347 ---------- ELECTRONIC EQUIPMENT & INSTRUMENTS--0.2% Agilent Technologies, Inc. (b) ....................... 220 5,203 ---------- ENVIRONMENTAL SERVICES--0.2% Waste Management, Inc. ............................... 320 8,336 ---------- FOOD DISTRIBUTORS--0.2% Sysco Corp. .......................................... 240 6,533 ---------- FOOD RETAIL--0.8% Kroger Co. (The) (b) ................................. 750 14,925 Safeway, Inc. (b) .................................... 454 13,252 ---------- 28,177 ---------- FOOTWEAR--0.3% NIKE, Inc. Class B ................................... 190 10,194 ---------- GAS UTILITIES--0.2% NiSource, Inc. ....................................... 290 6,331 ---------- GENERAL MERCHANDISE STORES--4.7% BJ's Wholesale Club, Inc. (b) ........................ 90 3,465 Costco Wholesale Corp. (b) ........................... 360 13,903 Family Dollar Stores, Inc. ........................... 230 8,107 Target Corp. ......................................... 980 37,338 Wal-Mart Stores, Inc. ................................ 1,850 101,769 ---------- 164,582 ----------
See Notes to Financial Statements 73 PHOENIX-MFS INVESTORS TRUST SERIES
SHARES VALUE ------ ---------- HEALTH CARE DISTRIBUTORS & SERVICES--0.6% Cardinal Health, Inc. ................................ 310 $ 19,037 ---------- HEALTH CARE EQUIPMENT--1.3% Applied Biosystems Group - Applera Corp. ............. 470 9,160 Baxter International, Inc. ........................... 280 12,446 Medtronic, Inc. ...................................... 370 15,855 Stryker Corp. ........................................ 140 7,491 ---------- 44,952 ---------- HEALTH CARE FACILITIES--1.2% HCA, Inc. ............................................ 710 33,725 HEALTHSOUTH Corp. (b) ................................ 510 6,523 ---------- 40,248 ---------- HOME IMPROVEMENT RETAIL--1.2% Home Depot, Inc. (The) ............................... 620 22,773 Lowe's Cos., Inc. .................................... 400 18,160 ---------- 40,933 ---------- HOUSEHOLD APPLIANCES--0.1% Black & Decker Corp. (The) ........................... 100 4,820 ---------- HOUSEHOLD PRODUCTS--1.8% Estee Lauder Cos., Inc. (The) Class A ................ 240 8,448 Kimberly-Clark Corp. ................................. 137 8,494 Procter & Gamble Co. (The) ........................... 510 45,543 ---------- 62,485 ---------- INDUSTRIAL CONGLOMERATES--3.8% 3M Co. ............................................... 390 47,970 General Electric Co. ................................. 2,680 77,854 Tyco International Ltd. .............................. 560 7,566 ---------- 133,390 ---------- INDUSTRIAL GASES--1.1% Air Products and Chemicals, Inc. ..................... 300 15,141 Praxair, Inc. ........................................ 400 22,788 ---------- 37,929 ---------- INDUSTRIAL MACHINERY--1.0% Danaher Corp. ........................................ 170 11,279 Illinois Tool Works, Inc. ............................ 210 14,343 Ingersoll-Rand Co. Class A ........................... 180 8,219 ---------- 33,841 ---------- INSURANCE BROKERS--0.2% Marsh & McLennan Cos., Inc. .......................... 80 7,728 ---------- INTEGRATED OIL & GAS--3.1% ChevronTexaco Corp. .................................. 110 9,735 Exxon Mobil Corp. .................................... 2,420 99,026 ---------- 108,761 ---------- INTEGRATED TELECOMMUNICATION SERVICES--3.2% ALLTEL Corp. ......................................... 80 3,760 AT&T Corp. ........................................... 790 8,453 BellSouth Corp. ...................................... 1,180 37,170 SBC Communications, Inc. ............................. 810 24,705 Verizon Communications, Inc. ......................... 890 35,734 ---------- 109,822 ---------- LIFE & HEALTH INSURANCE--1.0% AFLAC, Inc. .......................................... 200 6,400 MetLife, Inc. ........................................ 720 20,736 UnumProvident Corp. .................................. 260 6,617 ---------- 33,753 ---------- SHARES VALUE ------ ---------- MANAGED HEALTH CARE--0.8% CIGNA Corp. .......................................... 130 $ 12,665 UnitedHealth Group, Inc. ............................. 170 15,563 ---------- 28,228 ---------- MOTORCYCLE MANUFACTURERS--0.3% Harley-Davidson, Inc. ................................ 190 9,741 ---------- MOVIES & ENTERTAINMENT--3.3% AOL Time Warner, Inc. (b) ............................ 940 13,827 Fox Entertainment Group, Inc. Class A (b) ............ 110 2,393 Viacom, Inc. Class B (b) ............................. 1,930 85,634 Walt Disney Co. (The) ................................ 670 12,663 ---------- 114,517 ---------- MULTI-LINE INSURANCE--2.1% American International Group, Inc. ................... 710 48,443 Hartford Financial Services Group, Inc. (The) ........ 410 24,383 ---------- 72,826 ---------- MULTI-UTILITIES & UNREGULATED POWER--0.1% Duke Energy Corp. .................................... 132 4,105 ---------- NETWORKING EQUIPMENT--1.7% Cisco Systems, Inc. (b) .............................. 4,320 60,264 ---------- OFFICE SERVICES & SUPPLIES--0.2% Avery Dennison Corp. ................................. 100 6,275 ---------- OIL & GAS DRILLING--0.3% GlobalSantaFe Corp. .................................. 430 11,761 ---------- OIL & GAS EQUIPMENT & SERVICES--0.9% Baker Hughes, Inc. ................................... 480 15,979 Schlumberger Ltd. .................................... 300 13,950 ---------- 29,929 ---------- OIL & GAS EXPLORATION & PRODUCTION--0.7% Anadarko Petroleum Corp. ............................. 239 11,783 Apache Corp. ......................................... 80 4,599 Devon Energy Corp. ................................... 130 6,406 Unocal Corp. ......................................... 80 2,955 ---------- 25,743 ---------- PACKAGED FOODS AND MEATS--0.2% J.M. Smucker Co. (The) ............................... 1 34 Kellogg Co. .......................................... 160 5,738 Kraft Foods, Inc. Class A ............................ 50 2,047 ---------- 7,819 ---------- PAPER PRODUCTS--0.8% International Paper Co. .............................. 620 27,020 ---------- PERSONAL PRODUCTS--0.8% Gillette Co. (The) ................................... 810 27,435 ---------- PHARMACEUTICALS--9.0% Abbott Laboratories .................................. 600 22,590 Allergan, Inc. ....................................... 160 10,680 Johnson & Johnson .................................... 630 32,924 Lilly (Eli) & Co. .................................... 680 38,352 Merck & Co., Inc. .................................... 300 15,192 Pfizer, Inc. ......................................... 3,420 119,700 Pharmacia Corp. ...................................... 230 8,613 Wyeth ................................................ 1,280 65,536 ---------- 313,587 ---------- PHOTOGRAPHIC PRODUCTS--0.2% Eastman Kodak Co. .................................... 220 6,417 ----------
See Notes to Financial Statements 74 PHOENIX-MFS INVESTORS TRUST SERIES
SHARES VALUE ------ ---------- PROPERTY & CASUALTY INSURANCE--1.6% Allstate Corp. (The) ................................. 160 $ 5,917 Chubb Corp. (The) .................................... 240 16,992 St. Paul Cos., Inc. (The) ............................ 580 22,573 Travelers Property Casualty Corp. Class A (b) ........ 490 8,673 ---------- 54,155 ---------- PUBLISHING & PRINTING--2.5% Gannett Co., Inc. .................................... 490 37,191 McGraw-Hill Cos., Inc. (The) ......................... 160 9,552 New York Times Co. (The) Class A ..................... 640 32,960 Tribune Co. .......................................... 120 5,220 ---------- 84,923 ---------- RAILROADS--0.4% Union Pacific Corp. .................................. 210 13,289 ---------- SEMICONDUCTOR EQUIPMENT--0.4% Lam Research Corp. (b) ............................... 90 1,618 Novellus Systems, Inc. (b) ........................... 340 11,560 ---------- 13,178 ---------- SEMICONDUCTORS--2.1% Analog Devices, Inc. (b) ............................. 900 26,730 Intel Corp. .......................................... 950 17,356 Linear Technology Corp. .............................. 260 8,172 Maxim Integrated Products, Inc. (b) .................. 150 5,750 Texas Instruments, Inc. .............................. 690 16,353 ---------- 74,361 ---------- SOFT DRINKS--1.5% Coca-Cola Co. (The) .................................. 120 6,720 PepsiCo, Inc. ........................................ 950 45,790 ---------- 52,510 ---------- SPECIALTY CHEMICALS--0.1% Rohm & Haas Co. ...................................... 60 2,429 ---------- SYSTEMS SOFTWARE--4.1% Adobe Systems, Inc. .................................. 330 9,405 Microsoft Corp. (b) .................................. 1,680 91,896 Oracle Corp. (b) ..................................... 3,100 29,357 VERITAS Software Corp. (b) ........................... 560 11,082 ---------- 141,740 ---------- TELECOMMUNICATIONS EQUIPMENT--0.3% Motorola, Inc. ....................................... 720 10,382 ---------- TOBACCO--1.6% Philip Morris Cos., Inc. ............................. 1,300 56,784 ---------- TOTAL COMMON STOCKS (Identified cost $3,391,141) .................................... 3,141,952 ---------- FOREIGN COMMON STOCKS--5.2% BREWERS--0.5% Diageo plc (United Kingdom) .......................... 1,360 17,662 ---------- BROADCASTING & CABLE TV--0.1% News Corp. Ltd. (The) (Australia) .................... 490 2,663 ---------- SHARES VALUE ------ ---------- FERTILIZERS & AGRICULTURAL CHEMICALS--0.4% Syngenta AG (Switzerland) ............................ 230 $ 13,825 ---------- INTEGRATED OIL & GAS--1.1% BP plc ADR (United Kingdom) .......................... 650 32,818 Encana Corp (Canada) ................................. 130 3,992 ---------- 36,810 ---------- INTEGRATED TELECOMMUNICATION SERVICES--0.1% BT Group plc (United Kingdom) ........................ 600 2,305 ---------- IT CONSULTING & SERVICES--0.5% Accenture Ltd. Class A (Bermuda) (b) ................. 900 17,100 ---------- OIL & GAS EXPLORATION & PRODUCTION--0.3% Encana Corp. (Canada) ................................ 300 9,180 ---------- OIL & GAS REFINING, MARKETING & TRANSPORTATION--0.3% TotalFinaElf SA (France) ............................. 70 11,365 ---------- PACKAGED FOODS AND MEATS--0.2% Unilever NV NY Registered Shares (Netherlands) ....... 130 8,424 ---------- PHARMACEUTICALS--0.4% Aventis SA (France) .................................. 140 9,921 Glaxo Smithkline plc ADR (United Kingdom) ............ 100 4,314 ---------- 14,235 ---------- PROPERTY & CASUALTY INSURANCE--0.4% ACE Ltd. (Bermuda) ................................... 120 3,792 XL Capital Ltd. Class A (Bermuda) .................... 110 9,317 ---------- 13,109 ---------- RAILROADS--0.7% Canadian National Railway Co. (Canada) ............... 502 26,004 ---------- SEMICONDUCTORS--0.1% STMicroelectronics NV (Switzerland) .................. 165 4,014 ---------- TELECOMMUNICATIONS EQUIPMENT--0.1% Nokia Oyj ADR (Finland) .............................. 187 2,708 ---------- TOTAL FOREIGN COMMON STOCKS (Identified cost $170,802) ...................................... 179,404 ---------- TOTAL LONG TERM INVESTMENTS--95.7% (Identified cost $3,561,943) .................................... 3,321,356 ---------- STANDARD PAR & POOR'S VALUE RATING (000) -------- ------ SHORT-TERM OBLIGATIONS--4.8% FEDERAL AGENCY SECURITIES--4.8% Fannie Mae 1.90%, 7/1/02 ....................... AAA $167 167,000 ---------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $167,000) ...................................... 167,000 ---------- TOTAL INVESTMENTS--100.5% (Identified Cost $3,728,943) .................................... 3,488,356(a) Other assets and liabilities, net--(0.5)% ....................... (16,988) ---------- NET ASSETS--100.0% ................................................ $3,471,368 ========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $134,926 and gross depreciation of $397,786 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $3,751,216. (b) Non-income producing.
See Notes to Financial Statements 75 PHOENIX-MFS INVESTORS TRUST SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $3,728,943) ........................ $3,488,356 Receivables Investment securities sold ....................................................... 15,345 Receivable from adviser .......................................................... 8,146 Dividends ........................................................................ 3,753 Fund shares sold ................................................................. 380 Tax reclaim ...................................................................... 209 ---------- Total assets ................................................................... 3,516,189 ---------- LIABILITIES Cash overdraft ..................................................................... 11,189 Payables Fund shares repurchased .......................................................... 34 Professional fee ................................................................. 21,733 Printing fee ..................................................................... 5,285 Financial agent fee .............................................................. 3,651 Trustees' fee .................................................................... 1,721 Accrued expenses ................................................................... 1,208 ---------- Total liabilities .............................................................. 44,821 ---------- NET ASSETS ......................................................................... $3,471,368 ========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $3,837,922 Undistributed net investment income .............................................. 8,341 Accumulated net realized loss .................................................... (134,323) Net unrealized depreciation ...................................................... (240,572) ---------- NET ASSETS ......................................................................... $3,471,368 ========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 383,324 ========== Net asset value and offering price per share ....................................... $9.06 =====
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ............................................................................ $ 24,959 Interest ............................................................................. 1,246 Foreign taxes withheld ............................................................... (599) --------- Total investment income ............................................................ 25,606 --------- EXPENSES Investment advisory fee .............................................................. 13,121 Financial agent fee .................................................................. 21,509 Professional ......................................................................... 15,575 Custodian ............................................................................ 11,289 Printing ............................................................................. 3,766 Trustees ............................................................................. 3,455 Miscellaneous ........................................................................ 2,833 --------- Total expenses ..................................................................... 71,548 Less expenses borne by investment adviser .......................................... (54,630) --------- Net expenses ....................................................................... 16,918 --------- NET INVESTMENT INCOME .................................................................. 8,688 --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ...................................................... (133,656) Net realized loss on foreign currency transactions ................................... (261) Net change in unrealized appreciation (depreciation) on investments .................. (363,643) Net change in unrealized appreciation (depreciation) on foreign currency and foreign currency transactions .............................................................. 157 --------- NET LOSS ON INVESTMENTS ................................................................ (497,403) --------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................... $(488,715) =========
See Notes to Financial Statements 76 PHOENIX-MFS INVESTORS TRUST SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED FROM INCEPTION 6/30/02 10/29/01 TO (UNAUDITED) 12/31/01 ----------- -------------- FROM OPERATIONS Net investment income (loss) ................................................................ $ 8,688 $ 3,595 Net realized gain (loss) .................................................................... (133,917) 5,373 Net change in unrealized appreciation (depreciation) ........................................ (363,486) 122,914 ---------- ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................. (488,715) 131,882 ---------- ---------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ....................................................................... (4,575) -- Net realized short-term gains ............................................................... (5,146) -- ---------- ---------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ................................... (9,721) -- ---------- ---------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (63,270 and 327,032 shares, respectively) ..................... 632,523 3,277,340 Net asset value of shares issued from reinvestment of distributions (1,072 and 0 shares, respectively) ........................................................ 9,721 -- Cost of shares repurchased (7,247 and 803 shares, respectively) ............................. (73,335) (8,327) ---------- ---------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................... 568,909 3,269,013 ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS ....................................................... 70,473 3,400,895 NET ASSETS Beginning of period ......................................................................... 3,400,895 -- ---------- ---------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $8,341 AND $4,228, RESPECTIVELY) ............................................................................. $3,471,368 $3,400,895 ========== ==========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED FROM INCEPTION 6/30/02 10/29/01 TO (UNAUDITED) 12/31/01 ----------- -------------- Net asset value, beginning of period .......... $10.42 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ................ 0.02 0.01 Net realized and unrealized gain (loss) ..... (1.36) 0.41 ------ ------ TOTAL FROM INVESTMENT OPERATIONS .......... (1.34) 0.42 ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ........ (0.01) -- Distributions from net realized gains ....... (0.01) -- ------ ------ TOTAL DISTRIBUTIONS ....................... (0.02) -- ------ ------ CHANGE IN NET ASSET VALUE ..................... (1.36) 0.42 ------ ------ NET ASSET VALUE, END OF PERIOD ................ $ 9.06 $10.42 ====== ====== Total return .................................. (12.88)%(3) 4.25%(3) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ....... $3,471 $3,401 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) ....................... 0.97%(2) 0.95%(2)(4) Net investment income (loss) ................ 0.50%(2) 0.65%(2) Portfolio turnover ............................ 47%(3) 4%(3) (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 4.09% and 7.34% for the periods ended June 30, 2002 and December 31, 2001, respectively. (2) Annualized. (3) Not annualized. (4) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. See Notes to Financial Statements 77 PHOENIX-MFS VALUE SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE ------ ----------- COMMON STOCKS--84.4% AEROSPACE & DEFENSE--1.1% Northrop Grumman Corp. ............................... 980 $ 122,500 ----------- AGRICULTURAL PRODUCTS--1.0% Archer-Daniels-Midland Co. ........................... 9,030 115,494 ----------- ALUMINUM--1.8% Alcoa, Inc. .......................................... 6,160 204,204 ----------- AUTO PARTS & EQUIPMENT--0.9% Delphi Corp. ......................................... 7,940 104,808 ----------- BANKS--10.4% Bank of America Corp. ................................ 4,000 281,440 Comerica, Inc. ....................................... 1,000 61,400 FleetBoston Financial Corp. .......................... 6,870 222,245 Mellon Financial Corp. ............................... 4,380 137,663 National City Corp. .................................. 3,930 130,673 PNC Financial Services Group ......................... 510 26,663 SouthTrust Corp. ..................................... 3,120 81,494 SunTrust Banks, Inc. ................................. 1,840 124,605 Wachovia Corp. ....................................... 3,680 140,502 ----------- 1,206,685 ----------- COMPUTER HARDWARE--0.5% International Business Machines Corp. ................ 820 59,040 ----------- CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS--2.2% Caterpillar, Inc. .................................... 390 19,090 Deere & Co. .......................................... 4,940 236,626 ----------- 255,716 ----------- DEPARTMENT STORES--2.5% Sears, Roebuck and Co. ............................... 5,440 295,392 ----------- DIVERSIFIED FINANCIAL SERVICES--8.7% American Express Co. ................................. 3,130 113,682 Citigroup, Inc. ...................................... 10,360 401,450 Fannie Mae ........................................... 1,660 122,425 Freddie Mac .......................................... 1,960 119,952 Goldman Sachs Group, Inc. (The) ...................... 2,060 151,101 Merrill Lynch & Co., Inc. ............................ 2,540 102,870 ----------- 1,011,480 ----------- DIVERSIFIED METALS & MINING--0.3% Phelps Dodge Corp. (b) ............................... 760 31,312 ----------- ELECTRIC UTILITIES--3.4% Dominion Resources, Inc. ............................. 1,370 90,694 FPL Group, Inc. ...................................... 1,440 86,386 NSTAR ................................................ 2,180 97,620 Pinnacle West Capital Corp. .......................... 2,210 87,295 TXU Corp. ............................................ 620 31,961 ----------- 393,956 ----------- FOOTWEAR--0.3% NIKE, Inc. Class B ................................... 600 32,190 ----------- GAS UTILITIES--3.1% KeySpan Corp. ........................................ 1,740 65,511 National Fuel Gas Co. ................................ 3,690 83,062 Nicor, Inc. .......................................... 2,230 102,022 NiSource, Inc. ....................................... 2,830 61,779 WGL Holdings, Inc. ................................... 1,920 49,728 ----------- 362,102 ----------- SHARES VALUE ------ ----------- HOUSEHOLD PRODUCTS--3.1% Kimberly-Clark Corp. ................................. 2,440 $ 151,280 Procter & Gamble Co. (The) ........................... 2,380 212,534 ----------- 363,814 ----------- INDUSTRIAL CONGLOMERATES--1.1% 3M Co. ............................................... 1,080 132,840 ----------- INDUSTRIAL GASES--2.0% Air Products and Chemicals, Inc. ..................... 2,530 127,689 Praxair, Inc. ........................................ 1,900 108,243 ----------- 235,932 ----------- INDUSTRIAL MACHINERY--1.8% Danaher Corp. ........................................ 1,320 87,582 Illinois Tool Works, Inc. ............................ 370 25,271 ITT Industries, Inc. ................................. 60 4,236 Pall Corp. ........................................... 4,330 89,848 ----------- 206,937 ----------- INTEGRATED OIL & GAS--2.9% Exxon Mobil Corp. .................................... 8,200 335,544 ----------- INTEGRATED TELECOMMUNICATION SERVICES--2.8% AT&T Corp. ........................................... 8,660 92,662 BellSouth Corp. ...................................... 5,440 171,360 Verizon Communications, Inc. ......................... 1,540 61,831 ----------- 325,853 ----------- LIFE & HEALTH INSURANCE--1.0% MetLife, Inc. ........................................ 4,120 118,656 ----------- MOVIES & ENTERTAINMENT--2.3% Viacom, Inc. Class B (b) ............................. 4,340 192,566 Walt Disney Co. (The) ................................ 4,090 77,301 ----------- 269,867 ----------- MULTI-LINE INSURANCE--1.0% Hartford Financial Services Group, Inc. (The) ........ 1,970 117,156 ----------- MULTI-UTILITIES & UNREGULATED POWER--0.5% Energy East Corp. .................................... 2,590 58,534 ----------- OIL & GAS DRILLING--0.4% Noble Corp. .......................................... 1,140 44,004 ----------- OIL & GAS EQUIPMENT & SERVICES--0.9% Schlumberger Ltd. .................................... 2,290 106,485 ----------- OIL & GAS EXPLORATION & PRODUCTION--4.7% Anadarko Petroleum Corp. ............................. 2,190 107,967 Apache Corp. ......................................... 2,762 158,760 Devon Energy Corp. ................................... 1,980 97,574 Unocal Corp. ......................................... 4,850 179,159 ----------- 543,460 ----------- PACKAGED FOODS AND MEATS--2.5% J.M. Smucker Co. (The) ............................... 1,359 46,398 Kellogg Co. .......................................... 6,690 239,903 ----------- 286,301 ----------- PAPER PRODUCTS--1.7% International Paper Co. .............................. 4,390 191,316 ----------- PERSONAL PRODUCTS--0.8% Gillette Co. (The) ................................... 2,730 92,465 -----------
See Notes to Financial Statements 78 PHOENIX-MFS VALUE SERIES
SHARES VALUE ------ ----------- PHARMACEUTICALS--5.5% Abbott Laboratories .................................. 3,920 $ 147,588 Merck & Co., Inc. .................................... 2,590 131,158 Pfizer, Inc. ......................................... 5,850 204,750 Wyeth ................................................ 3,090 158,208 ----------- 641,704 ----------- PHOTOGRAPHIC PRODUCTS--0.8% Eastman Kodak Co. .................................... 3,180 92,761 ----------- PROPERTY & CASUALTY INSURANCE--3.3% Allstate Corp. (The) ................................. 4,940 182,681 Chubb Corp. (The) .................................... 1,160 82,128 SAFECO Corp. ......................................... 1,850 57,146 St. Paul Cos., Inc. (The) ............................ 1,530 59,548 ----------- 381,503 ----------- PUBLISHING & PRINTING--2.5% Gannett Co., Inc. .................................... 2,450 185,955 Tribune Co. .......................................... 2,400 104,400 ----------- 290,355 ----------- REITS--0.5% Equity Office Properties Trust ....................... 2,000 60,200 ----------- SEMICONDUCTORS--1.0% Analog Devices, Inc. (b) ............................. 1,150 34,155 Intel Corp. .......................................... 3,160 57,733 Texas Instruments, Inc. .............................. 1,060 25,122 ----------- 117,010 ----------- SOFT DRINKS--1.4% PepsiCo, Inc. ........................................ 3,290 158,578 ----------- SPECIALTY CHEMICALS--0.9% PPG Industries, Inc. ................................. 1,670 103,373 ----------- SYSTEMS SOFTWARE--0.6% Oracle Corp. (b) ..................................... 7,340 69,510 ----------- TOBACCO--2.1% Philip Morris Cos., Inc. ............................. 5,440 237,619 ----------- WIRELESS TELECOMMUNICATION SERVICES--0.1% AT&T Wireless Services, Inc. (b) ..................... 2,520 14,742 ----------- TOTAL COMMON STOCKS (Identified cost $9,967,792) .................................... 9,791,398 ----------- FOREIGN COMMON STOCKS--10.0% ALUMINUM--0.5% Alcan, Inc. (Canada) ................................. 1,520 57,030 ----------- BREWERS--0.6% Diageo plc (United Kingdom) .......................... 5,650 73,378 ----------- ELECTRIC UTILITIES--0.3% National Grid plc (United Kingdom) ................... 4,440 31,539 ----------- FERTILIZERS & AGRICULTURAL CHEMICALS--2.0% Syngenta AG (Switzerland) ............................ 3,760 226,007 ----------- INDUSTRIAL GASES--1.0% Akzo Nobel NV (Netherlands) .......................... 2,790 121,489 ----------- INTEGRATED OIL & GAS--2.0% BP plc ADR (United Kingdom) .......................... 3,340 168,637 TotalFinaELF SA ADR (France) ........................ 790 63,911 ----------- 232,548 ----------- SHARES VALUE ------ ----------- INTEGRATED TELECOMMUNICATION SERVICES--0.4% BT Group plc (United Kingdom) ........................ 11,000 $ 42,254 ----------- IT CONSULTING & SERVICES--0.4% Accenture Ltd. Class A (Bermuda) (b) ................. 2,550 48,450 ----------- PHARMACEUTICALS--0.5% GlaxoSmithKline plc (United Kingdom) ................. 2,640 57,063 ----------- PUBLISHING & PRINTING--1.0% Reed Elsevier plc (United Kingdom) ................... 12,060 114,620 ----------- RAILROADS--1.3% Canadian National Railway Co. (Canada) ............... 2,924 151,463 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $1,112,128) .................................... 1,155,841 ----------- CONVERTIBLE PREFERRED STOCKS--3.5% AEROSPACE & DEFENSE--0.6% Northrop Grumman Corp. Cv. Pfd. 7.25% ................ 510 67,580 ----------- AUTOMOBILE MANUFACTURERS--0.5% General Motors Corp. Cv. Pfd. 5.25% .................. 2,070 54,379 ----------- ELECTRIC UTILITIES--0.5% TXU Corp. Cv. Pfd. 8.75% ............................. 1,090 59,089 ----------- INTEGRATED TELECOMMUNICATION SERVICES--0.3% Alltel Corp. Cv. Pfd. 7.75% .......................... 780 37,860 ----------- MULTI-UTILITIES & UNREGULATED POWER--0.1% Williams Companies,Inc. Cv. Pfd. 9% .................. 980 12,328 ----------- PROPERTY & CASUALTY INSURANCE--0.3% Travelers Property Casualty Corp. Cv. Pfd. 4.50% ..... 1,330 31,455 ----------- TELECOMMUNICATIONS EQUIPMENT--1.2% Motorola, Inc. Cv. Pfd. 7% ........................... 3,120 143,114 ----------- TOTAL CONVERTIBLE PREFERRED STOCKS (Identified cost $414,554) ...................................... 405,805 ----------- TOTAL LONG-TERM INVESTMENTS--97.9% (Identified cost $11,494,474) ................................... 11,353,044 ----------- STANDARD PAR & POOR'S VALUE RATING (000) -------- ----- SHORT-TERM OBLIGATIONS--4.9% FEDERAL AGENCY SECURITIES--4.9% Fannie Mae 1.90%, 7/1/02 ..................... AAA $572 572,000 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $572,000) ...................................... 572,000 ----------- TOTAL INVESTMENTS--102.8% (Identified cost $12,066,474) ................................... 11,925,044(a) Other assets and liabilities, net--(2.8)% ....................... (330,437) ----------- NET ASSETS--100.0% ................................................ $11,594,607 =========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $446,531 and gross depreciation of $624,246 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $12,102,759. (b) Non-income producing.
See Notes to Financial Statements 79 PHOENIX-MFS VALUE SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $12,066,474) ....................... $11,925,044 Cash ............................................................................... 1,434,762 Receivables Fund shares sold ................................................................. 50,985 Investment securities sold ....................................................... 32,236 Dividends ........................................................................ 18,187 Receivable from adviser .......................................................... 4,082 ----------- Total assets ................................................................... 13,465,296 ----------- LIABILITIES Payables Investment securities purchased .................................................. 1,840,050 Fund shares repurchased .......................................................... 326 Professional fee ................................................................. 20,404 Financial agent fee .............................................................. 3,800 Printing fee ..................................................................... 2,569 Trustees' fee .................................................................... 2,192 Accrued expenses ................................................................... 1,348 ----------- Total liabilities .............................................................. 1,870,689 ----------- NET ASSETS ......................................................................... $11,594,607 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $11,794,976 Undistributed net investment income .............................................. 34,536 Accumulated net realized loss .................................................... (93,695) Net unrealized depreciation ...................................................... (141,210) ----------- NET ASSETS ......................................................................... $11,594,607 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 1,138,233 =========== Net asset value and offering price per share ....................................... $10.19 ======
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ........................................................................ $ 78,666 Interest ......................................................................... 2,915 Foreign taxes withheld ........................................................... (1,154) --------- Total investment income ........................................................ 80,427 --------- EXPENSES Investment advisory fee .......................................................... 26,719 Financial agent fee .............................................................. 22,774 Custodian ........................................................................ 18,226 Professional ..................................................................... 14,786 Printing ......................................................................... 3,859 Trustees ......................................................................... 3,464 Miscellaneous .................................................................... 2,834 --------- Total expenses ................................................................. 92,662 Less expenses borne by investment adviser ...................................... (58,020) Custodian fees paid indirectly ................................................. (1) --------- Net expenses ................................................................... 34,641 --------- NET INVESTMENT INCOME .............................................................. 45,786 --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................. (93,207) Net realized gain on foreign currency transactions ............................... 38 Net change in unrealized appreciation (depreciation) on investments .............. (324,636) Net change in unrealized appreciation (depreciation) on foreign currency and foreign currency transactions .................................................. 542 --------- NET LOSS ON INVESTMENTS ............................................................ (417,263) --------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $(371,477) =========
See Notes to Financial Statements 80 PHOENIX-MFS VALUE SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED FROM INCEPTION 6/30/02 10/29/01 TO (UNAUDITED) 12/31/01 ----------- -------------- FROM OPERATIONS Net investment income (loss) .................................................. $ 45,786 $ 8,591 Net realized gain (loss) ...................................................... (93,169) 9,765 Net change in unrealized appreciation (depreciation) .......................... (324,094) 182,884 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................... (371,477) 201,240 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ......................................................... (11,250) (8,371) Net realized short-term gains ................................................. (10,462) (49) ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ..................... (21,712) (8,420) ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (754,529 and 447,287 shares, respectively) ...... 7,937,342 4,527,099 Net asset value of shares issued from reinvestment of distributions (2,145 and 798 shares, respectively) ................................................... 21,712 8,420 Cost of shares repurchased (63,106 and 3,420 shares, respectively) ............ (664,163) (35,434) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ..................... 7,294,891 4,500,085 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS ......................................... 6,901,702 4,692,905 NET ASSETS Beginning of period ........................................................... 4,692,905 -- ----------- ----------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $34,536 AND $0, RESPECTIVELY) ............................................................... $11,594,607 $ 4,692,905 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED FROM INCEPTION 6/30/02 10/29/01 TO (UNAUDITED) 12/31/01 ----------- -------------- Net asset value, beginning of period ........ $10.55 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .............. 0.04 0.02 Net realized and unrealized gain (loss) ... (0.38) 0.55 ------ ------ TOTAL FROM INVESTMENT OPERATIONS ........ (0.34) 0.57 ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ...... (0.01) (0.02) Distributions from net realized gains ..... (0.01) --(5) ------ ------ TOTAL DISTRIBUTIONS ..................... (0.02) (0.02) ------ ------ CHANGE IN NET ASSET VALUE ................... (0.36) 0.55 ------ ------ NET ASSET VALUE, END OF PERIOD .............. $10.19 $10.55 ====== ====== Total return ................................ (3.29)%(3) 5.73%(3) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ..... $11,595 $4,693 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) ..................... 0.97%(2)(4) 0.95%(2)(4) Net investment income ..................... 1.29%(2) 1.33%(2) Portfolio turnover .......................... 22%(3) 9%(3) (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 2.60% and 6.43% for the periods ended June 30, 2002 and December 31, 2001. (2) Annualized. (3) Not annualized. (4) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (5) Amount is less than $0.01. See Notes to Financial Statements 81 PHOENIX-OAKHURST GROWTH AND INCOME SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE -------- ----------- COMMON STOCKS--96.2% ADVERTISING--0.1% Omnicom Group, Inc. ..................................... 1,400 $ 64,120 ------------ AEROSPACE & DEFENSE--2.4% Boeing Co. (The) ........................................ 16,800 756,000 General Dynamics Corp. .................................. 3,800 404,130 Honeywell International, Inc. ........................... 12,200 429,806 Lockheed Martin Corp. ................................... 2,400 166,800 United Technologies Corp. ............................... 10,800 733,320 ------------ 2,490,056 ------------ ALTERNATIVE CARRIERS--0.2% Commonwealth Telephone Enterprises, Inc. (b) ............ 4,000 160,960 ------------ ALUMINUM--0.4% Alcoa, Inc. ............................................. 12,300 407,745 ------------ APPAREL RETAIL--0.4% Foot Locker, Inc. (b) ................................... 14,300 206,635 Limited Brands .......................................... 10,800 230,040 ------------ 436,675 ------------ APPAREL, ACCESSORIES & LUXURY GOODS--1.0% Jones Apparel Group, Inc. (b) ........................... 10,500 393,750 Liz Claiborne, Inc. ..................................... 9,500 302,100 Polo Ralph Lauren Corp. (b) ............................. 3,900 87,360 Tommy Hilfiger Corp. (b) ................................ 19,500 279,240 ------------ 1,062,450 ------------ APPLICATION SOFTWARE--0.9% Fair, Isaac and Co., Inc. ............................... 11,500 378,005 Intuit, Inc. (b) ........................................ 5,200 258,544 NetIQ Corp. (b) ......................................... 10,000 226,300 PeopleSoft, Inc. (b) .................................... 3,700 55,056 ------------ 917,905 ------------ AUTO PARTS & EQUIPMENT--0.4% Delphi Corp. ............................................ 13,700 180,840 Johnson Controls, Inc. .................................. 3,000 244,830 ------------ 425,670 ------------ AUTOMOBILE MANUFACTURERS--0.7% Ford Motor Co. .......................................... 23,500 376,000 General Motors Corp. .................................... 6,800 363,460 ------------ 739,460 ------------ BANKS--6.9% Astoria Financial Corp. ................................. 12,600 403,830 Bank of America Corp. ................................... 25,200 1,773,072 Bank of New York Co., Inc. (The) ........................ 2,400 81,000 Bank One Corp. .......................................... 15,000 577,200 Comerica, Inc. .......................................... 9,200 564,880 First Tennessee National Corp. .......................... 15,000 574,500 FleetBoston Financial Corp. ............................. 28,000 905,800 Hibernia Corp. Class A .................................. 12,200 241,438 KeyCorp ................................................. 13,700 374,010 SunTrust Banks, Inc. .................................... 7,000 474,040 U.S. Bancorp ............................................ 17,600 410,960 United Bankshares, Inc. ................................. 6,900 202,722 Wachovia Corp. .......................................... 13,100 500,158 ------------ 7,083,610 ------------ BIOTECHNOLOGY--0.3% Charles River Laboratories International, Inc. (b) ...... 7,600 266,380 ------------ BREWERS--0.2% Coors (Adolph) Co. Class B .............................. 2,800 174,440 ------------ SHARES VALUE -------- ----------- BROADCASTING & CABLE TV--0.1% Clear Channel Communications, Inc. (b) .................. 4,000 $ 128,080 ------------ CASINOS & GAMING--0.5% Aztar Corp. (b) ......................................... 13,500 280,800 MGM MIRAGE (b) .......................................... 7,600 256,500 ------------ 537,300 ------------ COMMODITY CHEMICALS--0.2% Lyondell Chemical Co. ................................... 11,100 167,610 ------------ COMPUTER & ELECTRONICS RETAIL--0.5% Best Buy Co., Inc. (b) .................................. 5,050 183,315 Circuit City Stores-Circuit City Group .................. 6,600 123,750 RadioShack Corp. ........................................ 5,300 159,318 ------------ 466,383 ------------ COMPUTER HARDWARE--2.9% Apple Computer, Inc. (b) ................................ 10,600 187,832 Dell Computer Corp. (b) ................................. 23,300 609,062 Hewlett-Packard Co. ..................................... 55,874 853,755 International Business Machines Corp. ................... 17,800 1,281,600 ------------ 2,932,249 ------------ COMPUTER STORAGE & PERIPHERALS--0.2% EMC Corp. (b) ........................................... 29,500 222,725 ------------ CONSTRUCTION & ENGINEERING--0.3% Shaw Group, Inc. (The) (b) .............................. 9,600 294,720 ------------ CONSUMER FINANCE--0.6% MBNA Corp. .............................................. 19,200 634,944 ------------ DATA PROCESSING SERVICES--0.2% First Data Corp. ........................................ 6,200 230,640 ------------ DEPARTMENT STORES--1.4% Federated Department Stores, Inc. (b) ................... 8,300 329,510 May Department Stores Co. (The) ......................... 9,500 312,835 Penney (J.C.) Co., Inc. ................................. 17,000 374,340 Sears, Roebuck and Co. .................................. 8,300 450,690 ------------ 1,467,375 ------------ DIVERSIFIED CHEMICALS--0.7% Dow Chemical Co. (The) .................................. 9,100 312,858 Du Pont (E.I.) de Nemours & Co. ......................... 9,200 408,480 ------------ 721,338 ------------ DIVERSIFIED COMMERCIAL SERVICES--0.4% Cendant Corp. (b) ....................................... 22,400 355,712 ------------ DIVERSIFIED FINANCIAL SERVICES--7.6% Ambac Financial Group, Inc. ............................. 7,400 497,280 American Express Co. .................................... 13,700 497,584 Citigroup, Inc. ......................................... 59,200 2,294,000 Fannie Mae .............................................. 11,100 818,625 Freddie Mac ............................................. 7,800 477,360 Goldman Sachs Group, Inc. (The) ......................... 2,900 212,715 J.P. Morgan Chase & Co. ................................. 36,000 1,221,120 Merrill Lynch & Co., Inc. ............................... 16,900 684,450 Morgan Stanley .......................................... 24,100 1,038,228 ------------ 7,741,362 ------------ ELECTRIC UTILITIES--2.2% Alliant Energy Corp. .................................... 11,900 305,830 Edison International (b) ................................ 11,800 200,600 Entergy Corp. ........................................... 15,500 657,820 PPL Corp. ............................................... 9,900 327,492 Reliant Energy, Inc. .................................... 21,200 358,280 TXU Corp. ............................................... 8,700 448,485 ------------ 2,298,507 ------------
See Notes to Financial Statements 82 PHOENIX-OAKHURST GROWTH AND INCOME SERIES
SHARES VALUE -------- ----------- ELECTRICAL COMPONENTS & EQUIPMENT--0.1% Energizer Holding, Inc. (b) ............................. 4,600 $ 126,132 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--0.2% Tech Data Corp. (b) ..................................... 5,500 208,175 ------------ EXCHANGE TRADED FUNDS--4.0% SPDR Trust Series I ..................................... 41,400 4,096,944 ------------ FOOD DISTRIBUTORS--0.2% SUPERVALU, Inc. ......................................... 7,200 176,616 ------------ FOREST PRODUCTS--0.2% Louisiana-Pacific Corp. ................................. 16,500 174,735 ------------ GAS UTILITIES--0.9% Nicor, Inc. ............................................. 3,400 155,550 Sempra Energy ........................................... 32,800 725,864 ------------ 881,414 ------------ GENERAL MERCHANDISE STORES--2.4% Costco Wholesale Corp. (b) .............................. 5,900 227,858 Target Corp. ............................................ 9,500 361,950 Wal-Mart Stores, Inc. ................................... 33,900 1,864,839 ------------ 2,454,647 ------------ HEALTH CARE DISTRIBUTORS & SERVICES--0.5% Cardinal Health, Inc. ................................... 4,300 264,063 McKesson Corp. .......................................... 6,300 206,010 ------------ 470,073 ------------ HEALTH CARE EQUIPMENT--1.2% Bard (C.R.), Inc. ....................................... 4,000 226,320 Bio-Rad Laboratories, Inc. Class A (b) .................. 11,000 500,610 St. Jude Medical, Inc. (b) .............................. 6,100 450,485 ------------ 1,177,415 ------------ HOME IMPROVEMENT RETAIL--1.0% Home Depot, Inc. (The) .................................. 19,400 712,562 Lowe's Cos., Inc. ....................................... 7,300 331,420 ------------ 1,043,982 ------------ HOTELS, RESORTS & CRUISE LINES--0.2% Starwood Hotels & Resorts Worldwide, Inc. ............... 6,200 203,918 ------------ HOUSEHOLD APPLIANCES--0.2% Stanley Works (The) ..................................... 5,700 233,757 ------------ HOUSEHOLD PRODUCTS--2.2% Clorox Co. (The) ........................................ 8,000 330,800 Dial Corp. (The) ........................................ 10,000 200,200 Kimberly-Clark Corp. .................................... 4,900 303,800 Procter & Gamble Co. (The) .............................. 15,800 1,410,940 ------------ 2,245,740 ------------ HOUSEWARES & SPECIALTIES--0.6% Fortune Brands, Inc. .................................... 7,200 403,200 Tupperware Corp. ........................................ 12,300 255,717 ------------ 658,917 ------------ INDUSTRIAL CONGLOMERATES--4.1% 3M Co. .................................................. 4,100 504,300 General Electric Co. .................................... 116,900 3,395,945 Tyco International Ltd. ................................. 22,500 303,975 ------------ 4,204,220 ------------ INDUSTRIAL MACHINERY--0.3% ITT Industries, Inc. .................................... 3,900 275,340 ------------ INSURANCE BROKERS--0.3% Gallagher (Arthur J.) & Co. ............................. 8,000 277,200 ------------ SHARES VALUE -------- ----------- INTEGRATED OIL & GAS--5.7% ChevronTexaco Corp. ..................................... 13,200 $ 1,168,200 Conoco, Inc. ............................................ 9,200 255,760 Equitable Resources, Inc. ............................... 8,900 305,270 Exxon Mobil Corp. ....................................... 70,600 2,888,952 Occidental Petroleum Corp. .............................. 39,200 1,175,608 ------------ 5,793,790 ------------ INTEGRATED TELECOMMUNICATION SERVICES--3.9% ALLTEL Corp. ............................................ 12,500 587,500 AT&T Corp. .............................................. 22,600 241,820 BellSouth Corp. ......................................... 32,400 1,020,600 SBC Communications, Inc. ................................ 29,400 896,700 Sprint Corp. (FON Group) ................................ 10,000 106,100 Verizon Communications, Inc. ............................ 27,300 1,096,095 ------------ 3,948,815 ------------ IT CONSULTING & SERVICES--1.1% Computer Sciences Corp. (b) ............................. 15,400 736,120 Electronic Data Systems Corp. ........................... 10,200 378,930 ------------ 1,115,050 ------------ LIFE & HEALTH INSURANCE--0.9% Lincoln National Corp. .................................. 16,300 684,600 MetLife, Inc. ........................................... 8,400 241,920 ------------ 926,520 ------------ MANAGED HEALTH CARE--2.8% CIGNA Corp. ............................................. 5,300 516,326 Oxford Health Plans, Inc. (b) ........................... 13,700 636,502 UnitedHealth Group, Inc. ................................ 10,300 942,965 WellPoint Health Networks, Inc. (b) ..................... 10,200 793,662 ------------ 2,889,455 ------------ MOVIES & ENTERTAINMENT--1.8% AOL Time Warner, Inc. (b) ............................... 55,200 811,992 Viacom, Inc. Class B (b) ................................ 19,700 874,089 Walt Disney Co. (The) ................................... 10,400 196,560 ------------ 1,882,641 ------------ MULTI-LINE INSURANCE--1.9% American International Group, Inc. ...................... 29,000 1,978,670 ------------ MULTI-UTILITIES & UNREGULATED POWER--0.3% Energy East Corp. ....................................... 14,600 329,960 ------------ NETWORKING EQUIPMENT--1.2% Cisco Systems, Inc. (b) ................................. 88,400 1,233,180 ------------ OFFICE SERVICES & SUPPLIES--0.3% Pitney Bowes, Inc. ...................................... 7,100 282,012 ------------ OIL & GAS EQUIPMENT & SERVICES--0.1% Schlumberger Ltd. ....................................... 1,900 88,350 ------------ OIL & GAS EXPLORATION & PRODUCTION--0.2% Unocal Corp. ............................................ 4,500 166,230 ------------ PACKAGED FOODS AND MEATS--1.8% ConAgra Foods, Inc. ..................................... 22,800 630,420 Dole Food Co., Inc. ..................................... 6,900 199,065 Fresh Del Monte Produce, Inc. ........................... 13,700 342,500 Kellogg Co. ............................................. 6,700 240,262 McCormick & Co., Inc. ................................... 18,400 473,800 ------------ 1,886,047 ------------ PAPER PRODUCTS--0.4% Georgia-Pacific Corp. ................................... 6,900 169,602 International Paper Co. ................................. 6,500 283,270 ------------ 452,872 ------------
See Notes to Financial Statements 83 PHOENIX-OAKHURST GROWTH AND INCOME SERIES
SHARES VALUE -------- ----------- PHARMACEUTICALS--10.3% Abbott Laboratories ..................................... 15,900 $ 598,635 Bristol-Myers Squibb Co. ................................ 21,200 544,840 Forest Laboratories, Inc. (b) ........................... 5,200 368,160 Johnson & Johnson ....................................... 41,000 2,142,660 Lilly (Eli) & Co. ....................................... 12,200 688,080 Medicis Pharmaceutical Corp. Class A (b) ................ 5,800 248,008 Merck & Co., Inc. ....................................... 24,100 1,220,424 Mylan Laboratories, Inc. ................................ 19,000 595,650 Pfizer, Inc. ............................................ 70,200 2,457,000 Pharmacia Corp. ......................................... 13,700 513,065 Schering-Plough Corp. ................................... 20,200 496,920 Wyeth ................................................... 13,900 711,680 ------------ 10,585,122 ------------ PROPERTY & CASUALTY INSURANCE--0.6% MGIC Investment Corp. ................................... 3,100 210,180 PMI Group, Inc. (The) ................................... 6,400 244,480 Radian Group, Inc. ...................................... 4,000 195,400 ------------ 650,060 ------------ RAILROADS--0.5% Union Pacific Corp. ..................................... 8,100 512,568 ------------ SEMICONDUCTOR EQUIPMENT--0.7% Applied Materials, Inc. (b) ............................. 21,600 410,832 KLA-Tencor Corp. (b) .................................... 4,000 175,960 Lam Research Corp. (b) .................................. 9,100 163,618 ------------ 750,410 ------------ SEMICONDUCTORS--2.3% Altera Corp. (b) ........................................ 11,200 152,320 Analog Devices, Inc. (b) ................................ 5,000 148,500 Intel Corp. ............................................. 69,500 1,269,765 Micron Technology, Inc. (b) ............................. 5,900 119,298 Texas Instruments, Inc. ................................. 17,900 424,230 Xilinx, Inc. (b) ........................................ 9,300 208,599 ------------ 2,322,712 ------------ SOFT DRINKS--1.6% Coca-Cola Co. (The) ..................................... 10,100 565,600 Pepsi Bottling Group, Inc. (The) ........................ 6,500 200,200 PepsiCo, Inc. ........................................... 19,100 920,620 ------------ 1,686,420 ------------ SPECIALTY CHEMICALS--0.2% RPM, Inc. ............................................... 15,200 231,800 ------------ SPECIALTY STORES--0.6% Office Depot, Inc. (b) .................................. 12,800 215,040 Pier 1 Imports, Inc. .................................... 8,200 172,200 Tiffany & Co. ........................................... 3,800 133,760 Zale Corp. (b) .......................................... 2,700 97,875 ------------ 618,875 ------------ SYSTEMS SOFTWARE--4.3% Adobe Systems, Inc. ..................................... 4,300 122,550 Computer Associates International, Inc. ................. 16,700 265,363 Microsoft Corp. (b) ..................................... 59,100 3,232,770 Oracle Corp. (b) ........................................ 53,400 505,698 VERITAS Software Corp. (b) .............................. 12,800 253,312 ------------ 4,379,693 ------------ SHARES VALUE -------- ----------- TELECOMMUNICATIONS EQUIPMENT--1.0% Harris Corp. ............................................ 13,500 $ 489,240 Motorola, Inc. .......................................... 19,500 281,190 QUALCOMM, Inc. (b) ...................................... 7,000 192,430 Scientific-Atlanta, Inc. ................................ 5,400 88,830 ------------ 1,051,690 ------------ TOBACCO--1.4% Philip Morris Cos., Inc. ................................ 33,100 1,445,808 ------------ TOTAL COMMON STOCKS (Identified cost $108,281,012) ....................................... 98,546,391 ------------ FOREIGN COMMON STOCKS--2.0% AUTO PARTS & EQUIPMENT--0.3% Magna International, Inc. Class A (Canada) .............. 4,200 289,170 ------------ INTEGRATED OIL & GAS--1.0% Royal Dutch Petroleum Co. NY Registered Shares (Netherlands) ......................................... 19,600 1,083,292 ------------ PACKAGED FOODS AND MEATS--0.6% Unilever NV NY Registered Shares (Netherlands) .......... 9,300 602,640 ------------ TELECOMMUNICATIONS EQUIPMENT--0.1% Garmin Ltd. (Cayman Islands) (b) ........................ 5,500 121,275 ------------ TOTAL FOREIGN COMMON STOCKS (Identified cost $2,003,218) ......................................... 2,096,377 ------------ TOTAL LONG TERM INVESTMENTS--98.2% (Identified cost $110,284,230) ....................................... 100,642,768 ------------ STANDARD PAR & POOR'S VALUE RATING (000) -------- ----- SHORT-TERM OBLIGATIONS--2.0% COMMERCIAL PAPER--1.0% Emerson Electric Co. 2%, 7/1/02 .................... A-1 $ 680 679,924 Receivables Capital Corp. 1.90%, 7/1/02 ............ A-1 330 329,965 ------------ 1,009,889 ------------ FEDERAL AGENCY SECURITIES--1.0% Federal Home Loan Bank 1.73%, 7/11/02 .............. AAA 990 989,429 ------------ TOTAL SHORT-TERM OBLIGATIONS (Identified cost $1,999,524) ......................................... 1,999,318 ------------ TOTAL INVESTMENTS--100.2% (Identified Cost $112,283,754) ....................................... 102,642,086(a) Other assets and liabilities, net--(0.2)% ............................ (206,196) ------------ NET ASSETS--100.0% ..................................................... $102,435,890 ============ (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $9,955,648 and gross depreciation of $20,380,094 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $113,066,532. (b) Non-income producing.
See Notes to Financial Statements 84 PHOENIX-OAKHURST GROWTH AND INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $112,283,754) ...................... $102,642,086 Cash ............................................................................... 226 Receivables Investment securities sold ....................................................... 293,669 Dividends and interest ........................................................... 154,269 Fund shares sold ................................................................. 16,045 ------------ Total assets ................................................................... 103,106,295 ------------ LIABILITIES Payables Investment securities purchased .................................................. 405,300 Fund shares repurchased .......................................................... 96,460 Printing fee ..................................................................... 69,896 Investment advisory fee .......................................................... 63,902 Professional fee ................................................................. 16,930 Financial agent fee .............................................................. 10,927 Trustees' fee .................................................................... 3,647 Accrued expenses ................................................................... 3,343 ------------ Total liabilities .............................................................. 670,405 ------------ NET ASSETS ......................................................................... $102,435,890 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $121,562,023 Undistributed net investment income .............................................. 254,969 Accumulated net realized loss .................................................... (9,739,434) Net unrealized depreciation ...................................................... (9,641,668) ------------ NET ASSETS ......................................................................... $102,435,890 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 10,316,051 ============ Net asset value and offering price per share ....................................... $9.93 =====
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ........................................................................ $ 888,495 Interest ......................................................................... 20,675 Foreign taxes withheld ........................................................... (4,370) ------------ Total investment income ........................................................ 904,800 ------------ EXPENSES Investment advisory fee .......................................................... 393,489 Financial agent fee .............................................................. 66,790 Printing ......................................................................... 19,093 Professional ..................................................................... 15,438 Custodian ........................................................................ 10,833 Trustees ......................................................................... 3,386 Miscellaneous .................................................................... 5,085 ------------ Total expenses ................................................................. 514,114 Less expenses borne by investment adviser ...................................... (621) Custodian fees paid indirectly ................................................. (2) ------------ Net expenses ................................................................... 513,491 ------------ NET INVESTMENT INCOME .............................................................. 391,309 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................. (5,566,921) Net change in unrealized appreciation (depreciation) on investments .............. (9,885,363) ------------ NET LOSS ON INVESTMENTS ............................................................ (15,452,284) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $(15,060,975) ============
See Notes to Financial Statements 85 PHOENIX-OAKHURST GROWTH AND INCOME SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ----------- ------------ FROM OPERATIONS Net investment income (loss) .................................................................. $ 391,309 $ 741,811 Net realized gain (loss) ...................................................................... (5,566,921) (3,857,903) Net change in unrealized appreciation (depreciation) .......................................... (9,885,363) (6,712,958) ----------- ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................... (15,060,975) (9,829,050) ----------- ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ......................................................................... (308,775) (580,441) Net realized long-term gains .................................................................. -- (265,628) ----------- ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ..................................... (308,775) (846,069) ----------- ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (1,517,862 and 3,808,993 shares, respectively) .................. 16,718,691 44,476,346 Net asset value of shares issued from reinvestment of distributions (31,116 and 71,582 shares, respectively) ............................................................................... 308,775 846,069 Cost of shares repurchased (1,368,603 and 2,726,595 shares, respectively) ..................... (14,962,245) (31,396,116) ----------- ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ..................................... 2,065,221 13,926,299 ----------- ------------ NET INCREASE (DECREASE) IN NET ASSETS ......................................................... (13,304,529) 3,251,180 NET ASSETS Beginning of period ........................................................................... 115,740,419 112,489,239 ----------- ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $254,969 AND $172,435, RESPECTIVELY) ............................................................................... $102,435,890 $115,740,419 ============ ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS YEAR ENDED FROM ENDED DECEMBER 31, INCEPTION 6/30/02 ---------------------------- 3/2/98 TO (UNAUDITED) 2001 2000 1999 12/31/98 ----------- ------ ------ ------ -------- Net asset value, beginning of period ................................. $11.42 $12.52 $13.53 $11.99 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ....................................... 0.03 0.08 0.07 0.07 0.05 Net realized and unrealized gain (loss) ............................ (1.49) (1.09) (0.96) 1.97 1.99 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ................................. (1.46) (1.01) (0.89) 2.04 2.04 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ............................... (0.03) (0.06) (0.07) (0.07) (0.05) Distributions from net realized gains .............................. -- (0.03) (0.05) (0.16) -- Tax return of capital .............................................. -- -- -- (0.27) -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS .............................................. (0.03) (0.09) (0.12) (0.50) (0.05) ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ............................................ (1.49) (1.10) (1.01) 1.54 1.99 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ....................................... $ 9.93 $11.42 $12.52 $13.53 $11.99 ====== ====== ====== ====== ====== Total return ......................................................... (12.78)%(2) (8.17)% (6.61)% 17.00% 20.45%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ................................ $102,436 $115,740 $112,489 $101,834 $41,860 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ............................................. 0.91%(1)(4) 0.85%(4) 0.85% 0.85% 0.85%(1) Net investment income .............................................. 0.70%(1) 0.65% 0.54% 0.71% 1.02%(1) Portfolio turnover ................................................... 21%(2) 29% 53% 52% 81%(2) (1) Annualized. (2) Not annualized. (3)Ifthe investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.91%, 0.93%, 0.94%, 1 .01% and 1.46% for the periods ended June 30, 2002, December 31, 2001, 2000, 1999 and 1998, respectively. (4)The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 86 PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------- ------------ U.S. GOVERNMENT SECURITIES--4.3% U.S. TREASURY BONDS--0.4% U.S. Treasury Bonds 6.125%, 8/15/29 ............ AAA $ 400 $ 424,823 U.S. Treasury Bonds 5.375%, 2/15/31 ............ AAA 2,000 1,958,438 ------------ 2,383,261 ------------ U.S. TREASURY NOTES--3.9% U.S. Treasury Notes 2.75%, 10/31/03 ............ AAA 3,539 3,558,875 U.S. Treasury Notes 4.75%, 2/15/04 ............. AAA 1,200 1,241,386 U.S. Treasury Notes 5.25%, 5/15/04 ............. AAA 840 877,955 U.S. Treasury Notes 4.625%, 5/15/06 ............ AAA 9,375 9,656,250 U.S. Treasury Notes 3.50%, 11/15/06 ............ AAA 1,550 1,522,391 U.S. Treasury Notes 4.75%, 11/15/08 ............ AAA 3,000 3,054,885 U.S. Treasury Notes 6%, 8/15/09 ................ AAA 160 173,806 U.S. Treasury Notes 5.75%, 8/15/10 ............. AAA 260 278,119 ------------ 20,363,667 ------------ TOTAL U.S. GOVERNMENT SECURITIES (Identified cost $22,170,214) .......................................... 22,746,928 ------------ AGENCY MORTGAGE-BACKED SECURITIES--2.8% Fannie Mae 6.50%, 10/1/31 ...................... AAA 472 480,708 GNMA 6.50%, '23-'32 ............................ AAA 13,832 14,169,784 ------------ TOTAL AGENCY MORTGAGE-BACKED SECURITIES (Identified cost $14,360,341) .......................................... 14,650,492 ------------ AGENCY NON MORTGAGE-BACKED SECURITIES--0.9% Fannie Mae 6.50%, 8/15/04 ...................... Aaa(c) 449 479,315 Fannie Mae 6.625%, 9/15/09 ..................... Aaa(c) 2,855 3,127,921 FHLB 4.125%, 1/14/05 ........................... AAA 1,250 1,270,630 ------------ TOTAL AGENCY NON MORTGAGE-BACKED SECURITIES (Identified cost $4,547,600) ........................................... 4,877,866 ------------ MUNICIPAL BONDS--5.6% CALIFORNIA--1.6% Alameda Corridor Transportation Authority Revenue Taxable Series C 6.60%, 10/1/29 ...................................... AAA 1,000 1,030,890 Fresno County Pension Obligation Revenue Taxable 6.21%, 8/15/06 ....................... AAA 255 271,060 Fresno Pension Obligation Taxable 7.80%, 6/1/14 ....................................... AAA 1,000 1,181,030 Kern County Pension Obligation Revenue Taxable 7.26%, 8/15/14 ....................... AAA 420 469,417 Long Beach Pension Obligation Taxable 6.87%, 9/1/06 ................................ AAA 230 250,336 Pasadena Pension Funding Revenue Taxable Series A 7.10%, 5/15/10 ...................... AAA 1,500 1,667,970 San Bernardino County Pension Obligation Revenue Taxable 6.87%, 8/1/08 ................ AAA 520 575,702 Sonoma County Pension Obligation Revenue Taxable 6.625%, 6/1/13 ....................... AAA 1,420 1,530,377 Ventura County Pension Obligation Revenue Taxable 6.54%, 11/1/05 ....................... AAA 1,235 1,337,357 ------------ 8,314,139 ------------ FLORIDA--1.6% Miami Beach Special Obligation Revenue Taxable 8.60%, 9/1/21 ........................ AAA 4,085 4,455,183 Tampa Solid Waste System Revenue Taxable Series A 6.33%, 10/1/06 ...................... AAA 2,860 2,984,210 University of Miami Exchangeable Revenue Taxable Series A 7.65%, 4/1/20 (e) ........... AAA 810 858,138 ------------ 8,297,531 ------------ STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------- ------------ NEW JERSEY--0.2% New Jersey Sports & Exposition Authority Revenue Taxable Series A 6.75%, 3/1/10 ....... AAA $ 1,000 $ 1,084,460 ------------ NEW YORK--0.7% New York State Dormitory Authority Pension Obligation Revenue Taxable 6.90%, 4/1/03 ....................................... AA- 1,375 1,413,899 New York State Environmental Facilities Corp. 6.70%, 3/15/08 ......................... AAA 795 867,901 New York State Taxable Series C 6.35%, 3/1/07 ....................................... AAA 1,500 1,595,430 ------------ 3,877,230 ------------ OREGON--0.1% Multnomah County Pension Obligation Revenue Taxable 7.20%, 6/1/10 ................ Aaa(c) 100 111,208 Portland Pension Obligation Taxable Series C 7.32%, 6/1/08 ....................... Aaa(c) 555 619,674 ------------ 730,882 ------------ PENNSYLVANIA--0.7% Philadelphia Authority For Industrial Development Pension Funding Retirement Systems Revenue Taxable Series A 5.79%, 4/15/09 ............................... AAA 2,400 2,483,568 Pittsburgh Pension Obligation Taxable Series C 6.50%, 3/1/17 ....................... AAA 1,250 1,294,738 ------------ 3,778,306 ------------ TEXAS--0.7% Dallas-Fort Worth International Airport Revenue Taxable 6.40%, 11/1/07 ............... AAA 1,000 1,074,280 Texas Water Resources Finance Authority Revenue 6.62%, 8/15/10 ....................... AAA 2,265 2,438,839 ------------ 3,513,119 ------------ TOTAL MUNICIPAL BONDS (Identified cost $27,776,459) .......................................... 29,595,667 ------------ ASSET-BACKED SECURITIES--2.9% AESOP Funding II LLC 98-1A 6.14%, 5/20/06 ...................................... AAA 1,410 1,455,270 American Business Financial Services 4.76%, 6/15/21 ............................... AAA 1,000 1,005,364 ANRC Auto Owner Trust 01-A, A4 4.32%, 6/16/08 ...................................... AAA 3,200 3,258,912 CPL Transition Funding LLC 02-1, A4 5.96%, 7/15/13 ............................... AAA 2,100 2,163,985 Green Tree Financial Corp. 96-7, M1 7.70%, 10/15/27 .............................. AA- 1,000 986,067 Irwin Home Equity 01-2, 2A4 5.68%, 2/25/07 ...................................... AAA 2,250 2,297,109 WFS Financial Owner Trust 00-D, A3 6.83%, 7/20/03 ............................... AAA 2,793 2,857,526 World Omni Auto Receivables Trust 02-A, A4 W.I. 4.05%, 7/15/09 ....................... AAA 1,250 1,251,172 ------------ TOTAL ASSET-BACKED SECURITIES (Identified cost $15,065,425) .......................................... 15,275,405 ------------ CORPORATE BONDS--5.4% AGRICULTURAL PRODUCTS--0.2% Corn Products International, Inc. W.I. 8.25%, 7/15/07 ............................... BBB- 1,000 989,920 ------------
See Notes to Financial Statements 87 PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES
STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------- ------------ AIRLINES--0.3% Northwest Airlines Corp. 00-1 8.072%, 10/1/19 ...................................... AAA $ 1,437 $ 1,515,627 ------------ BANKS--0.2% U.S. Bank of Minnesota N.A. 6.30%, 7/15/08 ...................................... A 500 529,141 Wachovia Corp. 5.625%, 12/15/08 ................ A- 500 505,336 ------------ 1,034,477 ------------ BROADCASTING & CABLE TV--0.6% Comcast Cable Communications, Inc. ............. 7.125%, 6/15/13 .............................. BBB 1,500 1,351,820 Cox Communications, Inc. 7.75%, 11/1/10 ........ BBB 1,750 1,664,488 CSC Holdings, Inc. 7.625%, 7/15/18 ............. BB+ 500 366,863 ------------ 3,383,171 ------------ BUILDING PRODUCTS--0.1% Nortek, Inc. Series B 8.875%, 8/1/08 ........... B+ 700 707,000 ------------ CASINOS & GAMING--0.3% Harrahs Operating Co., Inc. 7.50%, 1/15/09 ...................................... BBB- 250 263,878 MGM Mirage, Inc. 9.75%, 6/1/07 ................. BB+ 500 527,500 Park Place Entertainment 9.375%, 2/15/07 ....... BB+ 500 523,750 ------------ 1,315,128 ------------ CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS--0.1% Cummins Engine, Inc. 6.45%, 3/1/05 ............. BBB- 360 366,416 ------------ CONSUMER FINANCE--0.1% Household Finance Corp. 6.75%, 5/15/11 ......... A 500 497,000 ------------ DIVERSIFIED FINANCIAL SERVICES--0.7% Erac USA Finance Co. 144A 7.35%, 6/15/08 (d) .................................. BBB+ 300 318,990 General Electric Capital Corp. Series MTNA 6%, 6/15/12 .................................. AAA 1,085 1,079,854 Pemex Master Trust 144A 7.875%, 2/1/09 (d) ..... BBB- 500 500,000 Pemex Project Funding Master Trust 9.125%, 10/13/10 ............................. BBB- 500 525,000 Stilwell Financial, Inc. W.I. 7.75%, 6/15/09 ... A- 1,250 1,232,850 ------------ 3,656,694 ------------ ENVIRONMENTAL SERVICES--0.2% Allied Waste Industries 7.875%, 3/15/05 ........ BB- 1,000 981,952 ------------ GAS UTILITIES--0.3% Amerigas Partners/Eagle Finance 8.875%, 5/20/11 ...................................... BB+ 1,250 1,306,250 ------------ HEALTH CARE DISTRIBUTORS & SERVICES--0.2% AmerisourceBergen Corp. 8.125%, 9/1/08 ......... BB- 1,060 1,099,750 ------------ HEALTH CARE FACILITIES--0.5% HCR Manor Care 7.50%, 6/15/06 .................. BBB 1,500 1,550,707 HEALTHSOUTH Corp. 10.75%, 10/1/08 .............. BB+ 750 832,500 ------------ 2,383,207 ------------ HOMEBUILDING--0.2% Lennar Corp. 7.625%, 3/1/09 .................... BB+ 1,000 1,020,000 ------------ INDUSTRIAL MACHINERY--0.4% ITW Cupids Financial Trust I 144A 6.55%, 12/31/11 (d) ................................. AA- 2,000 2,053,250 ------------ INSURANCE BROKERS--0.1% Willis Corroon Corp. 9%, 2/1/09 ................ B+ 675 698,625 ------------ INTEGRATED OIL & GAS--0.0% Conoco Funding Co. 5.45%, 10/15/06 ............. BBB+ 250 250,000 ------------ STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------- ------------ INTEGRATED TELECOMMUNICATION SERVICES--0.1% CenturyTel Enterprises, Inc. Series F 6.30%, 1/15/08 ...................................... BBB+ $ 500 $ 479,237 ------------ MARINE--0.0% Teekay Shipping Corp. 8.32%, 2/1/08 ............ BB+ 230 241,500 ------------ OIL & GAS EXPLORATION & PRODUCTION--0.1% Chesapeake Energy Corp. 8.375%, 11/1/08 ........ B+ 380 381,900 ------------ PACKAGED FOODS AND MEATS--0.2% Land O Lakes, Inc. 144A 8.75%, 11/15/11 (d) .... BB 1,000 935,000 ------------ PUBLISHING & PRINTING--0.1% Hollinger International Publishing, Inc. 9.25%, 3/15/07 ............................... B+ 625 646,875 ------------ RAILROADS--0.1% Union Pacific Corp. 6.50%, 4/15/12 ............. BBB 500 522,384 ------------ STEEL--0.3% Allegheny Technologies, Inc. 8.375%, 12/15/11 ..................................... BBB+ 1,300 1,353,014 ------------ WIRELESS TELECOMMUNICATION SERVICES--0.0% AT &T Wireless Services, Inc. 7.35%, 3/1/06 ....................................... BBB 250 207,500 ------------ TOTAL CORPORATE BONDS (Identified cost $27,888,837) .......................................... 28,025,877 ------------ NON-AGENCY MORTGAGE-BACKED SECURITIES--9.9% Advanta Mortgage Loan Trust 00-2, A3 7.76%, 5/25/18 ............................... AAA 875 903,984 CS First Boston Mortgage Securities Corp. 97-C2, A3 6.55%, 11/17/07 .................... AAA 4,200 4,484,298 CS First Boston Mortgage Securities Corp. 97-C2, B 6.72%, 11/17/07 ..................... Aa(c) 2,000 2,137,050 DLJ Commercial Mortgage Corp. 98-CF2, A1B 6.24%, 11/12/31 .......................... Aaa(c) 6,650 7,006,892 DLJ Mortgage Acceptance Corp. 96-CF1, A1B 7.58%, 2/12/06 ........................... AAA 1,400 1,449,298 First Horizon Asset Securities, Inc. 01-5, A3 6.75%, 8/25/31 ............................ AAA 1,000 1,023,906 First Union - Lehman Brothers Commercial Mortgage 97-C1, B 7.43%, 4/18/07 ............. Aa(c) 1,780 1,942,606 First Union Commercial Mortgage Trust 99-C1, A2 6.07%, 10/15/08 .................... AAA 5,000 5,215,625 G.E. Capital Mortgage Services, Inc. 96-8, 1M 7.25%, 5/25/26 ............................ AA 379 390,740 GMAC Commercial Mortgage Securities, Inc. 97-C2, A3 6.566%, 11/15/07 ................... Aaa(c) 1,250 1,304,829 JP Morgan Chase Commercial Mortgage Securities Corp. 01-CIBC, A3 6.26%, 3/15/33 ...................................... AAA 4,060 4,228,084 Lehman Brothers Commercial Conduit Mortgage Trust 98-C4, A1B 6.21%, 10/15/08 ..................................... AAA 6,500 6,808,949 Lehman Brothers Commercial Conduit Mortgage Trust 99-C2, A2 7.325%, 9/15/09 ...................................... Aaa(c) 1,840 2,026,901 Lehman Large Loan 97-LLI, B 6.95%, 3/12/07 ...................................... AA+ 1,470 1,590,971 Nationslink Funding Corp. 96-1, B 7.69%, 12/20/05 ..................................... AAA 900 943,875 Prudential Home Mortgage Securities 94-A, 3B3 6.762%, 4/28/24 (e) ...................... AAA(c) 1,048 1,078,493 Residential Funding Mortgage Securities I 96-S1, A11 7.10%, 1/25/26 .................... AAA 1,427 1,453,727 Residential Funding Mortgage Securities I 96-S4, M1 7.25%, 2/25/26 ..................... AAA 973 999,092
See Notes to Financial Statements 88 PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES
STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------- ------------ NON-AGENCY MORTGAGE-BACKED SECURITIES--CONTINUED Residential Funding Mortgage Securities I 96-S8, A4 6.75%, 3/25/11 ..................... AAA $ 414 $ 427,077 Securitized Asset Sales, Inc. 93-J, 2B 6.788%, 11/28/23 (e) ......................... AAA(c) 574 575,379 Washington Mutual Bank 99-WM3, 2A5 7.50%, 11/19/29 .............................. Aaa(c) 5,350 5,695,420 ------------ TOTAL NON-AGENCY MORTGAGE-BACKED SECURITIES (Identified cost $48,651,539) .......................................... 51,687,196 ------------ FOREIGN GOVERNMENT SECURITIES--6.2% BULGARIA--0.2% Republic of Bulgaria IAB PDI 2.813%, 7/28/11 (e) .................................. BB- 980 872,200 ------------ CHILE--0.4% Republic of Chile 7.125%, 1/11/12 .............. A- 1,950 1,970,730 ------------ COLOMBIA--0.2% Republic of Colombia 9.75%, 4/9/11 ............. BBB 937 960,651 ------------ COSTA RICA--0.4% Republic of Costa Rica 144A 9.335%, 5/15/09 (d) .................................. BB 1,755 1,904,175 ------------ EL SALVADOR--0.1% Republic of El Salvador 144A 9.50%, 8/15/06 (d) .................................. BB+ 675 754,734 ------------ GUATEMALA--0.1% Republic of Guatemala 144A 10.25%, 11/8/11 (d) .................................. BB 750 855,000 ------------ MEXICO--3.3% United Mexican States 8.375%, 1/14/11 .......... BBB- 1,000 1,037,500 United Mexican States 7.50%, 1/14/12 ........... BBB- 8,500 8,402,250 United Mexican States 8.125%, 12/30/19 ......... BBB- 6,000 5,844,000 United Mexican States Series MTN 8.30%, 8/15/31 ...................................... BBB- 2,000 1,945,000 ------------ 17,228,750 ------------ POLAND--1.4% Republic of Poland Series PDIB 6%, 10/27/14 (e) ................................. BBB+ 7,605 7,652,330 ------------ RUSSIA--0.1% Russian Federation RegS 5%, 3/31/30 (e) ........ B+ 500 348,125 ------------ TOTAL FOREIGN GOVERNMENT SECURITIES (Identified cost $31,928,586) .......................................... 32,546,695 ------------ FOREIGN CORPORATE BONDS--1.2% CANADA--0.2% Bowater Canada Finance 7.95%, 11/15/11 ......... BBB 1,250 1,289,309 ------------ CAYMAN ISLANDS--0.2% Petrobras International Finance 9.75%, 7/6/11 ....................................... Baa(c) 1,250 975,000 Triton Energy Ltd. 8.875%, 10/1/07 ............. BBB 250 275,000 ------------ 1,250,000 ------------ CHILE--0.2% Empresa Nacional de Electricidad SA Series B 8.50%, 4/1/09 ....................... BBB+ 260 247,858 Petropower I Funding Trust 144A 7.36%, 2/15/14 (d) .................................. BBB 711 642,977 ------------ 890,835 ------------ NETHERLANDS--0.4% HSBC Capital Funding LP 144A 9.547%, 12/31/49 (d),(e) ............................. A- 1,650 1,940,954 ------------ STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------- ------------ TUNISIA--0.2% Banque Centrale de Tunisie 7.375%, 4/25/12 ...................................... BBB $ 1,000 $ 965,000 ------------ TOTAL FOREIGN CORPORATE BONDS (Identified cost $6,391,285) ........................................... 6,336,098 ------------ TARGETED RETURN INDEX SECURITIES--0.8% Lehman Brothers Targeted Return Index Securities Trust Series 5-02 144A 5.882%, 1/25/07 (d),(e) ...................... Baa(c) 1,374 1,388,688 Lehman Brothers Targeted Return Index Securities Trust Series 10-02 144A 6.835%, 1/15/12 (d),(e) ...................... A(c) 2,736 2,808,066 ------------ TOTAL TARGETED RETURN INDEX SECURITIES (Identified cost $4,191,488) ........................................... 4,196,754 ------------ SHARES ------- COMMON STOCKS--56.1% ADVERTISING--0.9% Lamar Advertising Co. (b) ................................... 122,500 4,558,225 ------------ AEROSPACE & DEFENSE--2.4% General Dynamics Corp. ...................................... 64,500 6,859,575 Northrop Grumman Corp. ...................................... 23,800 2,975,000 United Technologies Corp. ................................... 43,700 2,967,230 ------------ 12,801,805 ------------ AIR FREIGHT & COURIERS--1.5% FedEx Corp. ................................................. 67,400 3,599,160 United Parcel Service, Inc. Class B ......................... 66,600 4,112,550 ------------ 7,711,710 ------------ BANKS--4.6% Bank of America Corp. ....................................... 132,200 9,301,592 Bank of New York Co., Inc. (The) ............................ 79,400 2,679,750 FleetBoston Financial Corp. ................................. 36,400 1,177,540 U.S. Bancorp ................................................ 149,900 3,500,165 Wells Fargo & Co. ........................................... 152,800 7,649,168 ------------ 24,308,215 ------------ BROADCASTING & CABLE TV--1.2% Clear Channel Communications, Inc. (b) ...................... 138,200 4,425,164 Liberty Media Corp. Class A (b) ............................. 159,300 1,593,000 ------------ 6,018,164 ------------ COMPUTER HARDWARE--1.0% International Business Machines Corp. ....................... 72,700 5,234,400 ------------ DATA PROCESSING SERVICES--1.7% BISYS Group, Inc. (The) (b) ................................. 132,700 4,418,910 Fiserv, Inc. (b) ............................................ 120,700 4,430,897 ------------ 8,849,807 ------------ DIVERSIFIED CHEMICALS--0.6% Dow Chemical Co. (The) ...................................... 94,900 3,262,662 ------------ DIVERSIFIED COMMERCIAL SERVICES--0.8% Cendant Corp. (b) ........................................... 274,400 4,357,472 ------------ DIVERSIFIED FINANCIAL SERVICES--3.9% Citigroup, Inc. ............................................. 165,200 6,401,500 Freddie Mac ................................................. 52,600 3,219,120 J.P. Morgan Chase & Co. ..................................... 99,000 3,358,080 Morgan Stanley .............................................. 140,500 6,052,740 Stilwell Financial, Inc. .................................... 69,800 1,270,360 ------------ 20,301,800 ------------
See Notes to Financial Statements 89 PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES
SHARES VALUE ------- ------------ ELECTRICAL COMPONENTS & EQUIPMENT--0.5% Emerson Electric Co. ........................................ 52,500 $ 2,809,275 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--0.6% Tech Data Corp. (b) ......................................... 88,700 3,357,295 ------------ GENERAL MERCHANDISE STORES--1.2% Wal-Mart Stores, Inc. ....................................... 117,400 6,458,174 ------------ HEALTH CARE DISTRIBUTORS & SERVICES--3.1% Cardinal Health, Inc. ....................................... 57,025 3,501,905 McKesson Corp. .............................................. 270,200 8,835,540 Omnicare, Inc. .............................................. 153,900 4,041,414 ------------ 16,378,859 ------------ HEALTH CARE EQUIPMENT--0.9% Bard (C.R.), Inc. ........................................... 48,500 2,744,130 Beckman Coulter, Inc. ....................................... 37,800 1,886,220 ------------ 4,630,350 ------------ HEALTH CARE FACILITIES--1.5% HCA, Inc. ................................................... 47,600 2,261,000 HEALTHSOUTH Corp. (b) ....................................... 205,700 2,630,903 Manor Care, Inc. (b) ........................................ 119,900 2,757,700 ------------ 7,649,603 ------------ INDUSTRIAL CONGLOMERATES--1.4% General Electric Co. ........................................ 260,900 7,579,145 ------------ INDUSTRIAL MACHINERY--0.6% Ingersoll-Rand Co. Class A .................................. 66,900 3,054,654 ------------ INTEGRATED OIL & GAS--4.1% ChevronTexaco Corp. ......................................... 110,400 9,770,400 Conoco, Inc. ................................................ 74,900 2,082,220 Exxon Mobil Corp. ........................................... 157,200 6,432,624 Phillips Petroleum Co. ...................................... 55,000 3,238,400 ------------ 21,523,644 ------------ INTEGRATED TELECOMMUNICATION SERVICES--2.6% BellSouth Corp. ............................................. 110,300 3,474,450 SBC Communications, Inc. .................................... 177,400 5,410,700 Verizon Communications, Inc. ................................ 121,200 4,866,180 ------------ 13,751,330 ------------ MANAGED HEALTH CARE--0.4% Caremark Rx, Inc. (b) ....................................... 130,800 2,158,200 ------------ MOVIES & ENTERTAINMENT--1.7% AOL Time Warner, Inc. (b) ................................... 186,900 2,749,299 Viacom, Inc. Class B (b) .................................... 136,800 6,069,816 ------------ 8,819,115 ------------ MULTI-LINE INSURANCE--1.8% American International Group, Inc. .......................... 136,000 9,279,280 ------------ NETWORKING EQUIPMENT--0.9% Cisco Systems, Inc. (b) ..................................... 328,800 4,586,760 ------------ OFFICE SERVICES & SUPPLIES--0.3% Miller (Herman), Inc. ....................................... 80,200 1,628,060 ------------ OIL & GAS DRILLING--0.1% Transocean, Inc. ............................................ 24,800 772,520 ------------ OIL & GAS EQUIPMENT & SERVICES--0.4% Baker Hughes, Inc. .......................................... 34,600 1,151,834 Schlumberger Ltd. ........................................... 20,100 934,650 ------------ 2,086,484 ------------ SHARES VALUE ------- ------------ OIL & GAS EXPLORATION & PRODUCTION--1.3% Anadarko Petroleum Corp. .................................... 48,900 $ 2,410,770 Devon Energy Corp. .......................................... 84,300 4,154,304 ------------ 6,565,074 ------------ PACKAGED FOODS AND MEATS--0.4% Dean Foods Co. (b) .......................................... 52,400 1,954,520 ------------ PAPER PRODUCTS--0.4% International Paper Co. ..................................... 49,500 2,157,210 ------------ PHARMACEUTICALS--3.0% Johnson & Johnson ........................................... 103,300 5,398,458 King Pharmaceuticals, Inc. (b) .............................. 71,699 1,595,303 Pfizer, Inc. ................................................ 247,300 8,655,500 ------------ 15,649,261 ------------ SEMICONDUCTOR EQUIPMENT--1.6% Applied Materials, Inc. (b) ................................. 164,000 3,119,280 Lam Research Corp. (b) ...................................... 156,300 2,810,274 Novellus Systems, Inc. (b) .................................. 28,200 958,800 Teradyne, Inc. (b) .......................................... 52,900 1,243,150 ------------ 8,131,504 ------------ SEMICONDUCTORS--1.3% Altera Corp. (b) ............................................ 139,100 1,891,760 Fairchild Semiconductor Corp. Class A (b) ................... 100,200 2,434,860 Intel Corp. ................................................. 69,000 1,260,630 Micron Technology, Inc. (b) ................................. 61,500 1,243,530 ------------ 6,830,780 ------------ SOFT DRINKS--3.5% Coca-Cola Co. (The) ......................................... 212,600 11,905,600 PepsiCo, Inc. ............................................... 131,900 6,357,580 ------------ 18,263,180 ------------ SYSTEMS SOFTWARE--2.5% Microsoft Corp. (b) ......................................... 236,800 12,952,960 ------------ TELECOMMUNICATIONS EQUIPMENT--0.5% Harris Corp. ................................................ 73,600 2,667,264 ------------ EXCHANGE TRADED FUNDS--0.9% SPDR Trust Series I ......................................... 45,300 4,482,888 ------------ TOTAL COMMON STOCKS (Identified cost $275,701,416) ......................................... 293,581,649 ------------ FOREIGN COMMON STOCKS--0.4% TELECOMMUNICATIONS EQUIPMENT--0.4% Nokia Oyj ADR (Finland) ..................................... 140,700 2,037,336 ------------ TOTAL FOREIGN COMMON STOCKS (Identified cost $3,155,687) ........................................... 2,037,336 ------------ TOTAL LONG TERM INVESTMENTS--96.5% (Identified cost $481,828,877) ......................................... 505,557,963 ------------
See Notes to Financial Statements 90 PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES
STANDARD PAR & POOR'S VALUE RATING (000) VALUE -------- ------- ------------ SHORT-TERM OBLIGATIONS--3.8% COMMERCIAL PAPER--3.6% Receivables Capital Corp. 1.90%, 7/1/02 ........ A-1+ $ 3,000 $ 3,000,000 Harley-Davidson Funding Corp. 1.77%, 7/9/02 ....................................... A-1 4,000 3,998,426 Enterprise Funding Corp. 1.83%, 7/10/02 ........ A-1+ 1,000 999,543 Special Purpose Accounts Receivable Cooperative Corp. 1.83%, 7/11/02 ............. A-1 2,500 2,498,729 Receivables Capital Corp. 1.80%, 7/16/02 ....... A-1+ 1,500 1,498,875 Donnelley (R.R.) & Sons 1.75%, 7/18/02 ......... A-1 2,035 2,033,319 SBC Communications Inc. 1.77%, 7/23/02 ......... A-1+ 2,580 2,577,210 Special Purpose Accounts Receivables Cooperative Corp. 1.83%, 8/27/02 ............. A-1 2,000 1,994,434 ------------ 18,600,536 ------------ FEDERAL AGENCY SECURITIES--0.2% Fannie Mae Discount Note 1.80%, 7/3/02 ......... AAA 1,130 1,129,887 Fannie Mae Discount Note 1.76%, 7/11/02 ........ AAA 110 109,945 ------------ 1,239,832 ------------ TOTAL SHORT-TERM OBLIGATIONS (Identified cost $19,841,192) .......................................... 19,840,368 ------------ TOTAL INVESTMENTS--100.3% (Identified Cost $501,670,069) ......................................... 525,398,331(a) Other assets and liabilities, net--(0.3)% .............................. (1,618,320) ------------ NET ASSETS--100.0% ....................................................... $523,780,011 ============ (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $52,402,377 and gross depreciation of $29,086,430 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $502,082,384. (b) Non-income producing. (c) As rated by Moody's or Fitch. (d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2002, these securities amounted to a value of $14,101,834 or 2.7% of net assets. (e) Variable or step coupon security; interest rate shown reflects the rate currently in effect.
See Notes to Financial Statements 91 PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $501,670,069) ...................... $525,398,331 Cash ............................................................................... 51,070 Receivables Investment securities sold ....................................................... 6,431,205 Interest and dividends ........................................................... 2,988,305 Fund shares sold ................................................................. 127,477 ------------ Total assets ................................................................... 534,996,388 ------------ LIABILITIES Payables Investment securities purchased .................................................. 10,411,971 Fund shares repurchased .......................................................... 283,375 Investment advisory fee .......................................................... 251,728 Financial agent fee .............................................................. 29,385 Trustees' fee .................................................................... 4,224 Accrued expenses ................................................................... 235,694 ------------ Total liabilities .............................................................. 11,216,377 ------------ NET ASSETS ......................................................................... $523,780,011 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $510,400,673 Undistributed net investment income .............................................. 366,844 Accumulated net realized loss .................................................... (10,715,768) Net unrealized appreciation ...................................................... 23,728,262 ------------ NET ASSETS ......................................................................... $523,780,011 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 41,400,948 ============ Net asset value and offering price per share ....................................... $12.65 ======
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Interest ......................................................................... $ 5,962,656 Dividends ........................................................................ 1,418,150 Foreign taxes withheld ........................................................... (2,934) ------------ Total investment income ........................................................ 7,377,872 ------------ EXPENSES Investment advisory fee .......................................................... 1,290,951 Financial agent fee .............................................................. 157,443 Custodian ........................................................................ 43,706 Printing ......................................................................... 43,522 Professional ..................................................................... 15,950 Trustees ......................................................................... 3,495 Miscellaneous .................................................................... 17,993 ------------ Total expenses ................................................................. 1,573,060 Custodian fees paid indirectly ................................................. (614) ------------ Net expenses ................................................................... 1,572,446 ------------ NET INVESTMENT INCOME .............................................................. 5,805,426 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................. (4,081,110) Net change in unrealized appreciation (depreciation) on investments .............. (43,673,407) ------------ NET LOSS ON INVESTMENTS ............................................................ (47,754,517) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $(41,949,091) ============
See Notes to Financial Statements 92 PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ------------ ------------ FROM OPERATIONS Net investment income (loss) ................................................................ $ 5,805,426 $ 10,007,330 Net realized gain (loss) .................................................................... (4,081,110) (2,464,632) Net change in unrealized appreciation (depreciation) ........................................ (43,673,407) (1,068,355) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONs ................................. (41,949,091) 6,474,343 ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ....................................................................... (6,244,861) (9,798,013) Net realized short-term gains ............................................................... -- (2,336,653) Net realized long-term gains ................................................................ -- (4,043,514) ------------ ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ................................... (6,244,861) (16,178,180) ------------ ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (1,826,994 and 2,160,117 shares, respectively) ................ 24,551,669 30,160,519 Net asset value of shares issued in conjunction with Plan of Reorganization (17,438,879 and 0 shares, respectively) (See Note 8) ...................................... 236,890,944 -- Net asset value of shares issued from reinvestment of distributions (478,613 and 1,176,732 shares, respectively) .............................................. 6,244,861 16,178,180 Cost of shares repurchased (5,279,408 and 5,455,567 shares, respectively) ................... (70,530,346) (75,830,661) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................... 197,157,128 (29,491,962) ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ....................................................... 148,963,176 (39,195,799) NET ASSETS Beginning of period ......................................................................... 374,816,835 414,012,634 ------------ ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $366,844 AND $806,279, RESPECTIVELY) ............................................................................. $523,780,011 $374,816,835 ============ ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, 6/30/02 ------------------------------------------------- (UNAUDITED) 2001(3) 2000 1999 1998 1997 ----------- ------- ------ ------ ------ ------ Net asset value, beginning of period .................. $13.92 $14.25 $16.18 $15.65 $14.12 $13.65 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ........................ 0.17 0.36(1) 0.44 0.36 0.29 0.32 Net realized and unrealized gain (loss) ............. (1.25) (0.11) (0.33) 1.36 2.57 2.46 ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .................. (1.08) 0.25 0.11 1.72 2.86 2.78 ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ................ (0.19) (0.35) (0.43) (0.36) (0.28) (0.33) Distributions from net realized gains ............... -- (0.23) (1.61) (0.83) (1.05) (1.98) ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS ............................... (0.19) (0.58) (2.04) (1.19) (1.33) (2.31) ------ ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ............................. (1.27) (0.33) (1.93) 0.53 1.53 0.47 ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ........................ $12.65 $13.92 $14.25 $16.18 $15.65 $14.12 ====== ====== ====== ====== ====== ====== Total return .......................................... (7.78)%(5) 1.87% 0.58% 11.26% 20.79% 20.73% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ................. $523,780 $374,817 $414,013 $476,709 $480,897 $429,002 RATIO TO AVERAGE NET ASSETS OF: Operating expenses .................................. 0.70%(2)(4) 0.71%(2) 0.70% 0.70% 0.68% 0.71% Net investment income ............................... 2.59%(4) 2.56% 2.65% 2.21% 1.97% 2.09% Portfolio turnover .................................... 38%(5) 44% 60% 65% 139% 368% (1) Computed using average shares outstanding. (2) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (3) As required, effective January 1, 2001, the Fund adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities and including paydown gains and losses in interest income. The effect of this change for the year ended December 31, 2001 to decrease the ratio of net investment income to average net assets from 2.60% to 2.56%. There was no effect to net investment income per share and net realized and unrealized gain (loss) per share. Per share ratios and supplemental data for prior periods have not been restated to reflect this change. (4) Annualized. (5) Not annualized.
See Notes to Financial Statements 93 PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE ------- ----------- COMMON STOCKS--49.7% UNITED STATES--49.7% Abbott Laboratories (Pharmaceuticals) ................... 900 $ 33,885 Allegheny Energy, Inc. (Electric Utilities) ............. 1,100 28,325 Amerada Hess Corp. (Integrated Oil & Gas) ............... 300 24,750 Ameren Corp. (Electric Utilities) ....................... 400 17,204 American Electric Power Co., Inc. (Electric Utilities) .. 600 24,012 AmSouth Bancorp. (Banks) ................................ 1,200 26,856 AOL Time Warner, Inc. (Movies & Entertainment) (b) ...... 3,850 56,633 Aon Corp. (Insurance Brokers) ........................... 700 20,636 Archer-Daniels-Midland Co. (Agricultural Products) ...... 1,785 22,830 Arrow Electronics, Inc. (Electronic Equipment & Instruments) (b) ...................................... 800 16,600 Ashland, Inc. (Oil & Gas Refining, Marketing & Transportation) ....................................... 550 22,275 AT&T Corp. (Integrated Telecommunication Services) ...... 1,900 20,330 Avaya Inc. (Networking Equipment) (b) ................... 5,000 24,750 Avnet, Inc. (Electronic Equipment & Instruments) (b) .... 800 17,592 Bank of America Corp. (Banks) ........................... 3,500 246,260 Bear Stearns Cos., Inc. (The) (Diversified Financial Services) ............................................. 400 24,480 BellSouth Corp. (Integrated Telecommunication Services) ............................................. 1,375 43,312 Bemis Co., Inc. (Paper Packaging) ....................... 500 23,750 Black & Decker Corp. (The) (Household Appliances) ....... 525 25,305 Bristol-Myers Squibb Co. (Pharmaceuticals) .............. 1,800 46,260 Burlington Northern Santa Fe Corp. (Railroads) .......... 975 29,250 Cabot Corp. (Diversified Chemicals) ..................... 650 18,622 Centex Corp. (Homebuilding) ............................. 600 34,674 ChevronTexaco Corp. (Integrated Oil & Gas) .............. 640 56,640 Chubb Corp. (The) (Property & Casualty Insurance) ....... 300 21,240 Cisco Systems, Inc. (Networking Equipment) (b) .......... 2,100 29,295 Citigroup, Inc. (Diversified Financial Services) ........ 1,930 74,787 Coca-Cola Co. (The) (Soft Drinks) ....................... 1,300 72,800 Compuware Corp. (Application Software) (b) .............. 2,000 12,140 ConAgra Foods, Inc. (Packaged Foods and Meats) .......... 1,075 29,724 Cooper Industries Ltd. Class A (Electrical Components & Equipment) .......................................... 700 27,510 Dana Corp. (Auto Parts & Equipment) ..................... 600 11,118 Dell Computer Corp. (Computer Hardware) (b) ............. 1,400 36,596 Delphi Corp. (Auto Parts & Equipment) ................... 1,400 18,480 Donnelley (R.R.) & Sons Co. (Commercial Printing) ....... 800 22,040 Dow Chemical Co. (The) (Diversified Chemicals) .......... 1,244 42,769 Du Pont (E.I.) de Nemours & Co. (Diversified Chemicals) ............................................ 800 35,520 Eastman Chemical Co. (Diversified Chemicals) ............ 300 14,070 Eastman Kodak Co. (Photographic Products) ............... 1,000 29,170 Electronic Data Systems Corp. (IT Consulting & Services) ............................................. 600 22,290 Entergy Corp. (Electric Utilities) ...................... 2,700 114,588 Exxon Mobil Corp. (Integrated Oil & Gas) ................ 3,600 147,312 Fannie Mae (Diversified Financial Services) ............. 775 57,156 Federated Department Stores, Inc. (Department Stores) (b) ........................................... 500 19,850 FleetBoston Financial Corp. (Banks) ..................... 1,081 34,970 FMC Corp. (Diversified Chemicals) (b) ................... 300 9,051 General Electric Co. (Industrial Conglomerates) ......... 6,300 183,015 Georgia-Pacific Corp. (Paper Products) .................. 850 20,893 Golden West Financial Corp. (Banks) ..................... 475 32,670 Goodrich Corp. (Aerospace & Defense) .................... 825 22,539 Goodyear Tire & Rubber Co. (The) (Tires & Rubber) ....... 1,050 19,645 Health Net, Inc. (Managed Health Care) (b) .............. 1,850 49,525 Hewlett-Packard Co. (Computer Hardware) ................. 6,250 95,500 Hilton Hotels Corp. (Hotels, Resorts & Cruise Lines) .... 1,400 19,460 Home Depot, Inc. (The) (Home Improvement Retail) ........ 300 11,019 SHARES VALUE ------- ----------- UNITED STATES--CONTINUED Hubbell, Inc. Class B (Electrical Components & Equipment) ............................................ 500 $ 17,075 Huntington Bancshares, Inc. (Banks) ..................... 1,300 25,246 Intel Corp. (Semiconductors) ............................ 4,600 84,042 International Business Machines Corp. (Computer Hardware) ............................................. 1,700 122,400 International Paper Co. (Paper Products) ................ 300 13,074 J.P. Morgan Chase & Co. (Diversified Financial Services) ............................................. 900 30,528 Johnson & Johnson (Pharmaceuticals) ..................... 1,950 101,907 Jones Apparel Group, Inc. (Apparel, Accessories & Luxury Goods) (b) ..................................... 700 26,250 KeyCorp (Banks) ......................................... 1,150 31,395 Lear Corp. (Auto Parts & Equipment) (b) ................. 1,250 57,813 Leggett & Platt, Inc. (Home Furnishings) ................ 1,000 23,400 Lehman Brothers Holdings, Inc. (Diversified Financial Services) ............................................. 1,000 62,520 Lilly (Eli) & Co. (Pharmaceuticals) ..................... 325 18,330 Liz Claiborne, Inc. (Apparel, Accessories & Luxury Goods) ................................................ 800 25,440 Louisiana-Pacific Corp. (Forest Products) ............... 1,000 10,590 May Department Stores Co. (The) (Department Stores) ............................................... 700 23,051 MeadWestvaco Corp. (Paper Products) ..................... 1,330 44,635 Medtronic, Inc. (Health Care Equipment) ................. 100 4,285 Merck & Co., Inc. (Pharmaceuticals) ..................... 1,800 91,152 MetLife, Inc. (Life & Health Insurance) ................. 775 22,320 MGIC Investment Corp. (Property & Casualty Insurance) ............................................ 400 27,120 Microsoft Corp. (Systems Software) (b) .................. 3,300 180,510 Morgan Stanley (Diversified Financial Services) ......... 700 30,156 National City Corp. (Banks) ............................. 1,000 33,250 Norfolk Southern Corp. (Railroads) ...................... 2,800 65,464 Oracle Corp. (Systems Software) (b) ..................... 4,000 37,880 PepsiCo, Inc. (Soft Drinks) ............................. 500 24,100 Pfizer, Inc. (Pharmaceuticals) .......................... 5,700 199,500 PG&E Corp. (Electric Utilities) (b) ..................... 600 10,734 Pharmacia Corp. (Pharmaceuticals) ....................... 1,450 54,303 Philip Morris Cos., Inc. (Tobacco) ...................... 3,425 149,604 Phillips Petroleum Co. (Integrated Oil & Gas) ........... 300 17,664 PPG Industries, Inc. (Specialty Chemicals) .............. 500 30,950 Praxair, Inc. (Industrial Gases) ........................ 600 34,182 Procter & Gamble Co. (The) (Household Products) ......... 200 17,860 Puget Energy, Inc. (Electric Utilities) ................. 800 16,520 Pulte Homes, Inc. (Homebuilding) ........................ 2,000 114,960 Quantum Corp. (Computer Storage & Peripherals) (b) ...... 1,400 5,880 Qwest Communications International, Inc. (Integrated Telecommunication Services) (b) ....................... 22,500 63,000 Regions Financial Corp. (Banks) ......................... 800 28,120 Reliant Resources, Inc. (Electric Utilities) (b) ........ 5,400 47,250 Sara Lee Corp. (Packaged Foods and Meats) ............... 4,700 97,008 SBC Communications, Inc. (Integrated Telecommunication Services) ........................... 3,200 97,600 Schering-Plough Corp. (Pharmaceuticals) ................. 500 12,300 Sears, Roebuck and Co. (Department Stores) .............. 700 38,010 Sherwin-Williams Co. (The) (Home Improvement Retail) ............................................... 950 28,434 Smurfit-Stone Container Corp. (Metal & Glass Containers) (b) ....................................... 1,200 18,504 Solectron Corp. (Electronic Equipment & Instruments) (b) ...................................... 1,700 10,455 Sonoco Products Co. (Paper Packaging) ................... 900 25,488 Sprint Corp. (FON Group) (Integrated Telecommunication Services) ........................... 1,000 10,610
See Notes to Financial Statements 94 PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES
SHARES VALUE ------- ----------- UNITED STATES--CONTINUED St. Paul Cos., Inc. (The) (Property & Casualty Insurance) ............................................ 525 $ 20,433 SunTrust Banks, Inc. (Banks) ............................ 500 33,860 SUPERVALU, Inc. (Food Distributors) ..................... 500 12,265 Tech Data Corp. (Electronic Equipment & Instruments) (b) ...................................... 500 18,925 Tellabs, Inc. (Telecommunications Equipment) (b) ........ 2,800 17,360 Temple-Inland, Inc. (Paper Packaging) ................... 200 11,572 TJX Cos., Inc. (The) (Apparel Retail) ................... 1,400 27,454 Torchmark Corp. (Life & Health Insurance) ............... 500 19,100 Tyson Foods, Inc. Class A (Meat, Poultry & Fish) ........ 2,100 32,571 U.S. Bancorp (Banks) .................................... 2,165 50,553 Union Pacific Corp. (Railroads) ......................... 500 31,640 Union Planters Corp. (Banks) ............................ 750 24,278 V. F. Corp. (Apparel, Accessories & Luxury Goods) ....... 400 15,684 Valero Energy Corp. (Oil & Gas Refining, Marketing & Transportation) ....................................... 250 9,355 Verizon Communications, Inc. (Integrated Telecommunication Services) ........................... 1,700 68,255 Wachovia Corp. (Banks) .................................. 1,800 68,724 Washington Mutual, Inc. (Banks) ......................... 4,425 164,212 Westar Energy, Inc. (Electric Utilities) ................ 700 10,745 Whirlpool Corp. (Household Appliances) .................. 400 26,144 WorldCom, Inc. - WorldCom Group (Integrated Telecommunication Services) (b)(c) .................... 54,800 4,932 Wyeth (Pharmaceuticals) ................................. 1,200 61,440 Xcel Energy, Inc. (Electric Utilities) .................. 700 11,739 ----------- TOTAL COMMON STOCKS (Identified cost $6,155,717) ......................................... 5,346,083 ----------- FOREIGN COMMON STOCKS--48.2% AUSTRALIA--2.0% Australia and New Zealand Banking Group Ltd. (Banks) ............................................... 11,600 125,616 BHP Billiton Ltd. (Diversified Metals & Mining) ......... 8,400 48,570 CSR Ltd. (Construction Materials) ....................... 10,600 38,024 ----------- 212,210 ----------- AUSTRIA--0.4% Erste Bank der oesterreichischen Sparkassen AG (Banks) ............................................... 300 21,437 OMV AG (Oil & Gas Refining, Marketing & Transportation) ....................................... 250 24,567 ----------- 46,004 ----------- BELGIUM--0.4% Delhaize Group (Food Retail) ............................ 900 42,221 ----------- CANADA--4.6% Abitibi-Consolidated, Inc. (Paper Products) ............. 4,700 43,326 Bank of Montreal (Banks) ................................ 1,407 32,991 Bank of Nova Scotia (Banks) ............................. 2,300 75,598 BCE, Inc. (Integrated Telecommunication Services) ....... 709 12,295 Canadian National Railway Co. (Railroads) ............... 700 36,839 Canadian Natural Resources Ltd. (Oil & Gas Exploration & Production) ......................................... 400 13,550 Creo, Inc. (Electronic Equipment & Instruments) (b) ..... 600 6,107 Magna International, Inc. (Auto Parts & Equipment) ...... 1,700 117,030 Manulife Financial Corp. (Life & Health Insurance) ...... 900 25,830 Nortel Networks Corp. (Telecommunications Equipment) (b) ........................................ 4,950 7,160 Petro-Canada (Integrated Oil & Gas) ..................... 500 14,054 Quebecor World, Inc. (Publishing & Printing) ............ 1,000 26,761 Sun Life Financial Services of Canada, Inc. (Diversified Financial Services) ................................... 1,000 21,645 Talisman Energy, Inc. (Oil & Gas Exploration & Production) ........................................... 1,250 56,094 ----------- 489,280 ----------- SHARES VALUE ------- ----------- FINLAND--0.4% Stora Enso Oyj (Paper Products) ......................... 1,000 $ 14,014 UPM-Kymmene Oyj (Paper Products) ........................ 700 27,557 ----------- 41,571 ----------- FRANCE--5.0% Accor SA (Hotels, Resorts & Cruise Lines) ............... 300 12,168 Alcatel SA Class A (Telecommunications Equipment) ....... 400 2,781 Assurances Generales de France (Multi-line Insurance) ... 2,600 119,455 BNP Paribas SA (Banks) .................................. 1,100 60,838 Compagnie de Saint-Gobain (Industrial Gases) ............ 2,200 98,753 Lagardere S.C.A. (Publishing & Printing) ................ 300 12,989 PSA Peugeot Citroen (Automobile Manufacturers) .......... 2,960 153,623 Societe Generale Class A (Banks) ........................ 450 29,644 TotalFinaElf SA (Oil & Gas Refining, Marketing & Transportation) ....................................... 260 42,215 Vivendi Universal SA (Broadcasting & Cable TV) .......... 200 4,322 ----------- 536,788 ----------- GERMANY--1.8% AMB Generali Holding AG (Multi-line Insurance) .......... 270 26,293 Celanese AG (Specialty Chemicals) (b) ................... 1,350 31,332 E.ON AG (Industrial Conglomerates) ...................... 500 29,135 KarstadtQuelle AG (Department Stores) ................... 450 11,688 Merck KGaA (Pharmaceuticals) ............................ 200 5,383 Siemens AG (Industrial Conglomerates) ................... 1,325 79,498 Volkswagen AG (Automobile Manufacturers) ................ 200 9,718 ----------- 193,047 ----------- HONG KONG--0.4% CLP Holdings Ltd. (Electric Utilities) .................. 2,400 9,539 Wharf Holdings Ltd. (The) (Real Estate Management & Development) ........................................ 15,000 35,386 ----------- 44,925 ----------- IRELAND--1.2% Allied Irish Banks PLC (Banks) .......................... 5,400 71,731 Bank of Ireland (Banks) ................................. 2,500 31,135 Jefferson Smurfit Group plc (Paper Products) ............ 9,000 27,369 ----------- 130,235 ----------- ITALY--2.3% ENI SpA (Integrated Oil & Gas) .......................... 12,150 193,194 Riunione Adriatica di Sicurta SpA (Multi-line Insurance) ............................................ 800 10,738 Telecom Italia Mobile SpA (Wireless Telecommunication Services) ............................................. 4,900 20,083 Telecom Italia SpA (Integrated Telecommunication Services) ............................................. 2,800 21,929 ----------- 245,944 ----------- JAPAN--10.0% Canon, Inc. (Electronic Equipment & Instruments) ........ 5,000 188,977 Daiichi Pharmaceutical (Pharmaceuticals) ................ 1,000 18,272 Daiwa House Industry Co. Ltd. (Homebuilding) ............ 3,000 18,347 Hitachi Ltd. (Industrial Conglomerates) ................. 6,000 38,797 Hitachi Maxell Ltd. (Consumer Electronics) .............. 1,000 14,901 Honda Motor Co. Ltd. (Automobile Manufacturers) ......... 5,200 210,853 Mitsui Chemicals, Inc. (Specialty Chemicals) ............ 4,000 19,991 Mitsui O.S.K. Lines Ltd. (Marine) ....................... 16,000 33,640 Nichirei Corp. (Agricultural Products) .................. 7,000 22,485 Nippon Meat Packers, Inc. (Meat, Poultry & Fish) ........ 1,000 12,532 Nissan Motor Co. Ltd. (Automobile Manufacturers) ........ 21,000 145,424 Nomura Holdings, Inc. (Diversified Financial Services) .. 1,000 14,684 Oji Paper Co. Ltd. (Paper Products) ..................... 5,000 28,576 Sumitomo Mitsui Banking Corp. (Banks) ................... 2,400 11,714 Sumitomo Trust & Banking Co. Ltd. (The) (Banks) ......... 4,000 19,223 Takeda Chemical Industries Ltd. (Pharmaceuticals) ....... 1,000 43,886 Takefuji Corp. (Consumer Finance) ....................... 1,500 104,250
See Notes to Financial Statements 95 PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES
SHARES VALUE ------- ----------- JAPAN--CONTINUED Tanabe Seiyaku Co. Ltd (Pharmaceuticals) ................ 1,000 $ 8,761 Tohoku Electric Power Co., Inc. (Electric Utilities) .... 1,900 26,632 Tokyo Electric Power Co., Inc. (The) (Electric Utilities) 1,100 22,623 Toyota Motor Corp. (Automobile Manufacturers) ........... 1,100 29,185 UFJ Holdings, Inc. (Banks) (b) .......................... 6 14,517 Uny Co. Ltd. (Specialty Stores) ......................... 1,000 11,330 Yahama Corp. (Leisure Products) ......................... 2,000 19,457 ----------- 1,079,057 ----------- LUXEMBOURG--0.9% Arcelor (Steel) (b) ..................................... 5,900 83,734 Arcelor (Steel) (b) ..................................... 1,066 15,160 ----------- 98,894 ----------- NETHERLANDS--3.1% DSM NV (Specialty Chemicals) ............................ 1,500 69,613 ING Groep NV (Diversified Financial Services) ........... 3,800 97,577 Koninklijke (Royal) Philips Electronics NV (Industrial Conglomerates) ........................................ 1,300 36,296 Koninklijke Vopak NV (Marine) ........................... 400 7,561 Royal Dutch Petroleum Co. (Integrated Oil & Gas) ........ 1,650 91,909 Wolters Kluwer NV (Diversified Commercial Services) ..... 1,638 31,093 ----------- 334,049 ----------- NORWAY--0.1% Norsk Hydro ASA (Industrial Conglomerates) .............. 200 9,542 ----------- SPAIN--1.2% Banco Santander Central Hispano SA (Banks) .............. 6,200 49,231 Grupo Dragados SA (Construction & Engineering) .......... 700 12,479 Iberdrola SA (Electric Utilities) ....................... 2,700 39,332 Telefonica SA (Integrated Telecommunication Services) (b) ......................................... 3,329 27,946 ----------- 128,988 ----------- SWEDEN--1.4% Autoliv, Inc. (Auto Parts & Equipment) .................. 950 23,940 Electrolux AB (Consumer Electronics) .................... 3,100 62,572 Holmen AB B Shares (Paper Products) ..................... 800 21,240 Nordea AB (Banks) ....................................... 8,700 47,333 ----------- 155,085 ----------- SWITZERLAND--2.1% Novartis AG Registered Shares (Pharmaceuticals) ......... 2,700 118,748 Swiss Re Registered Shares (Property & Casualty Insurance) ............................................ 930 90,928 UBS AG Registered Shares (Diversified Financial Services) (b) ......................................... 325 16,347 ----------- 226,023 ----------- SHARES VALUE ------- ----------- UNITED KINGDOM--10.9% Allied Domecq plc (Brewers) ............................. 2,600 $ 17,052 AstraZeneca plc (Pharmaceuticals) ....................... 1,200 49,681 AWG plc (Water Utilities) ............................... 2,700 22,636 BP plc (Integrated Oil & Gas) ........................... 13,300 111,707 British American Tobacco plc (Tobacco) .................. 4,600 49,434 BT Group plc (Integrated Telecommunication Services) ............................................. 5,100 19,591 CGNU plc (Multi-line Insurance) ......................... 3,900 31,359 Diageo plc (Brewers) .................................... 800 10,390 Electrocomponents plc (Distributors) .................... 900 5,042 GlaxoSmithKline plc (Pharmaceuticals) ................... 4,346 93,938 HSBC Holdings plc (Banks) ............................... 1,600 18,402 Imperial Chemical Industries plc (Diversified Chemicals) ............................................ 3,000 14,588 Lattice Group plc (Gas Utilities) ....................... 9,500 24,763 Lloyds TSB Group plc (Diversified Financial Services) ... 3,700 36,829 Mersey Docks & Harbour Co. plc (Marine) ................. 2,400 21,712 Morgan Crucible Company plc (Industrial Gases) .......... 900 1,564 Persimmon plc (Homebuilding) ............................ 2,200 13,364 Rank Group plc (Movies & Entertainment) ................. 3,200 13,048 Royal & Sun Alliance Insurance Group plc (Multi-line Insurance) ............................................ 28,600 105,065 Royal Bank of Scotland Group plc (Banks) ................ 1,400 39,693 Safeway plc (Food Retail) ............................... 40,857 175,471 Shell Transport & Trading Co. plc (Integrated Oil & Gas) .................................................. 3,200 24,145 Six Continents plc (Hotels, Resorts & Cruise Lines) ..... 6,700 68,069 Smith & Nephew plc (Health Care Equipment) .............. 2,000 11,097 Smiths Group plc (Industrial Conglomerates) ............. 1,000 12,987 Taylor Woodrow plc (Homebuilding) ....................... 3,400 9,329 Unilever plc (Packaged Foods and Meats) ................. 7,100 64,720 Vodafone Group plc (Wireless Telecommunication Services) ............................................. 46,100 63,244 Whitbread plc (Restaurants) ............................. 600 5,602 Wolseley plc (Distributors) ............................. 3,741 37,921 ----------- 1,172,443 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $5,287,908) ......................................... 5,186,306 ----------- RIGHTS--0.0% MARINE--0.0% Koninklijke Vopak NV - Rights (b) ....................... 400 4 ----------- TOTAL RIGHTS (Identified cost $0) ................................................. 4 ----------- TOTAL INVESTMENTS--97.9% (Identified Cost $11,443,625) ........................................ 10,532,393(a) Other assets and liabilities, net--2.1% .............................. 223,785 ----------- NET ASSETS--100.0% ..................................................... $10,756,178 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $850,714 and gross depreciation of $1,761,946 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $11,443,625. (b) Non-income producing.
See Notes to Financial Statements 96 PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES INDUSTRY DIVERSIFICATION AS A PERCENTAGE OF TOTAL VALUE OF TOTAL LONG-TERM INVESTMENTS (UNAUDITED) Aerospace & Defense ....................................... 0.2% Agricultural Products ..................................... 0.4 Apparel Retail ............................................ 0.3 Apparel, Accessories & Luxury Goods ....................... 0.6 Application Software ...................................... 0.1 Auto Parts & Equipment .................................... 2.2 Automobile Manufacturers .................................. 5.2 Banks ..................................................... 13.8 Brewers ................................................... 0.3 Commercial Printing ....................................... 0.2 Computer Hardware ......................................... 2.4 Computer Storage & Peripherals ............................ 0.1 Construction & Engineering ................................ 0.1 Construction Materials .................................... 0.4 Consumer Electronics ...................................... 0.7 Consumer Finance .......................................... 1.0 Department Stores ......................................... 0.9 Distributors .............................................. 0.4 Diversified Chemicals ..................................... 1.3 Diversified Commercial Services ........................... 0.3 Diversified Financial Services ............................ 4.4 Diversified Metals & Mining ............................... 0.5 Electric Utilities ........................................ 3.6 Electrical Components & Equipment ......................... 0.4 Electronic Equipment & Instruments ........................ 2.5 Food Distributors ......................................... 0.1 Food Retail ............................................... 2.1 Forest Products ........................................... 0.1 Gas Utilities ............................................. 0.2 Health Care Equipment ..................................... 0.1 Home Furnishings .......................................... 0.2 Home Improvement Retail ................................... 0.4 Homebuilding .............................................. 1.8 Hotels, Resorts & Cruise Lines ............................ 0.9 Household Appliances ...................................... 0.5 Household Products ........................................ 0.2 IT Consulting & Services .................................. 0.2 Industrial Conglomerates .................................. 3.7 Industrial Gases .......................................... 1.3 Insurance Brokers ......................................... 0.2 Integrated Oil & Gas ...................................... 6.5 Integrated Telecommunication Services ..................... 3.7 Leisure Products .......................................... 0.2 Life & Health Insurance ................................... 0.6 Managed Health Care ....................................... 0.5 Marine .................................................... 0.6 Meat, Poultry & Fish ...................................... 0.4 Metal & Glass Containers .................................. 0.2 Movies & Entertainment .................................... 0.7 Multi-line Insurance ...................................... 2.8 Networking Equipment ...................................... 0.5 Oil & Gas Exploration & Production ........................ 0.7 Oil & Gas Refining, Marketing & Transportation ............ 0.9 Packaged Foods and Meats .................................. 1.8 Paper Packaging ........................................... 0.6 Paper Products ............................................ 2.3 Pharmaceuticals ........................................... 9.1 Photographic Products ..................................... 0.3 Property & Casualty Insurance ............................. 1.5 Publishing & Printing ..................................... 0.4 Railroads ................................................. 1.5 Real Estate Management & Development ...................... 0.3 Semiconductors ............................................ 0.8 Soft Drinks ............................................... 0.9 Specialty Chemicals ....................................... 1.4 Specialty Stores .......................................... 0.1 Steel ..................................................... 0.9 Systems Software .......................................... 2.1 Telecommunications Equipment .............................. 0.3 Tires & Rubber ............................................ 0.2 Tobacco ................................................... 1.9 Water Utilities ........................................... 0.2 Wireless Telecommunication Services ....................... 0.8 ----- 100.0% ===== See Notes to Financial Statements 97 PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $11,443,625) ....................... $10,532,393 Foreign currency at value (Identified cost $42,455) ................................ 44,689 Receivables Receivable from adviser .......................................................... 3,031 Investment securities sold ....................................................... 465,693 Fund shares sold ................................................................. 137 Dividends ........................................................................ 34,466 Tax reclaim ...................................................................... 6,891 ----------- Total assets ................................................................... 11,087,300 ----------- LIABILITIES Cash overdraft ..................................................................... 281,420 Payables Fund shares repurchased .......................................................... 2,902 Professional fee ................................................................. 17,322 Printing fee ..................................................................... 9,036 Custodian fee .................................................................... 8,131 Financial agent fee .............................................................. 4,075 Trustees' fee .................................................................... 3,717 Accrued expenses ................................................................... 4,519 ----------- Total liabilities .............................................................. 331,122 ----------- NET ASSETS ......................................................................... $10,756,178 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $11,670,580 Undistributed net investment income .............................................. 56,965 Accumulated net realized loss .................................................... (63,749) Net unrealized depreciation ...................................................... (907,618) ----------- NET ASSETS ......................................................................... $10,756,178 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 1,181,104 =========== Net asset value and offering price per share ....................................... $9.11 =====
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends .............................................................................. $129,610 Interest ............................................................................... 1,171 Foreign taxes withheld ................................................................. (10,362) -------- Total investment income .............................................................. 120,419 -------- EXPENSES Investment advisory fee ................................................................ 43,321 Financial agent fee .................................................................... 23,986 Professional ........................................................................... 17,166 Custodian .............................................................................. 12,221 Trustees ............................................................................... 3,455 Printing ............................................................................... 3,186 Miscellaneous .......................................................................... 1,284 -------- Total expenses ....................................................................... 104,619 Less expenses borne by investment adviser ............................................ (50,795) -------- Net expenses ......................................................................... 53,824 -------- NET INVESTMENT INCOME .................................................................... 66,595 -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities ........................................................ (50,834) Net realized loss on foreign currency transactions ..................................... (1,017) Net change in unrealized appreciation (depreciation) on investments .................... (515,003) Net change in unrealized appreciation (depreciation) on foreign currency and foreign currency transactions ................................................................ (1,442) -------- NET LOSS ON INVESTMENTS .................................................................. (568,296) -------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ..................................... $(501,701) =========
See Notes to Financial Statements 98 PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ----------- ---------- FROM OPERATIONS Net investment income (loss) ................................................................ $ 66,595 $ 81,192 Net realized gain (loss) .................................................................... (51,851) 46,548 Net change in unrealized appreciation (depreciation) ........................................ (516,445) (697,218) ---------- ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................. (501,701) (569,478) ---------- ---------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ....................................................................... (11,652) (78,519) Net realized short-term gains ............................................................... -- (56,477) ---------- ---------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ................................... (11,652) (134,996) ---------- ---------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (333,084 and 248,659 shares, respectively) .................... 3,150,545 2,445,801 Net asset value of shares issued from reinvestment of distributions (1,300 and 14,118 shares, respectively) ............................................................................. 11,652 134,996 Cost of shares repurchased (73,758 and 79,889 shares, respectively) ......................... (692,982) (763,447) ---------- ---------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................... 2,469,215 1,817,350 ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS ....................................................... 1,955,862 1,112,876 NET ASSETS Beginning of period ......................................................................... 8,800,316 7,687,440 ---------- ---------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $56,965 AND $2,022, RESPECTIVELY) ............................................................................. $10,756,178 $8,800,316 =========== ==========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED FROM INCEPTION 6/30/02 YEAR ENDED 11/20/00 TO (UNAUDITED) 12/31/01 12/31/00 ----------- ---------- -------------- Net asset value, beginning of period ............................................. $ 9.56 $10.42 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ................................................... 0.06 0.09 0.02 Net realized and unrealized gain (loss) ........................................ (0.50) (0.80) 0.41 ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ............................................. (0.44) (0.71) 0.43 ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ........................................... (0.01) (0.09) (0.01) Distributions from net realized gains .......................................... -- (0.06) -- ------ ------ ------ TOTAL DISTRIBUTIONS .......................................................... (0.01) (0.15) (0.01) ------ ------ ------ CHANGE IN NET ASSET VALUE ........................................................ (0.45) (0.86) 0.42 ------ ------ ------ NET ASSET VALUE, END OF PERIOD ................................................... $ 9.11 $ 9.56 $10.42 ====== ====== ====== Total return ..................................................................... (4.63)%(2) (6.84)% 4.35%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ............................................ $10,756 $8,800 $7,687 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(3) .......................................................... 1.12%(1) 1.05% 1.05%(1) Net investment income .......................................................... 1.38%(1) 1.02% 1.12%(1) Portfolio turnover ............................................................... 20%(2) 24% 0%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 2.17%, 2.80% and 5.41% for the periods ended June 30, 2002, December 31, 2001 and 2000, respectively.
See Notes to Financial Statements 99 PHOENIX-SANFORD BERNSTEIN MID-CAP VALUE SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE ------- ----------- COMMON STOCKS--95.6% AGRICULTURAL PRODUCTS--1.5% Corn Products International, Inc. ....................... 37,000 $ 1,151,440 ----------- APPAREL, ACCESSORIES & LUXURY GOODS--2.1% Jones Apparel Group, Inc. (b) ........................... 36,500 1,368,750 V. F. Corp. ............................................. 7,300 286,233 ----------- 1,654,983 ----------- AUTO PARTS & EQUIPMENT--3.1% BorgWarner, Inc. ........................................ 7,500 433,200 Dana Corp. .............................................. 36,000 667,080 Lear Corp. (b) .......................................... 7,000 323,750 Modine Manufacturing Co. ................................ 41,000 1,007,780 ----------- 2,431,810 ----------- BANKS--11.3% BancorpSouth, Inc. ...................................... 40,500 818,100 Bank of Hawaii Corp. .................................... 40,800 1,142,400 Commercial Federal Corp. ................................ 34,000 986,000 Hibernia Corp. Class A .................................. 58,000 1,147,820 Huntington Bancshares, Inc. ............................. 58,000 1,126,360 Popular, Inc. ........................................... 15,000 505,200 SouthTrust Corp. ........................................ 13,400 350,008 UnionBanCal Corp. ....................................... 27,500 1,288,375 Washington Federal, Inc. ................................ 29,909 755,501 Whitney Holding Corp. ................................... 25,500 783,870 ----------- 8,903,634 ----------- CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS--3.0% PACCAR, Inc. ............................................ 28,600 1,269,554 Terex Corp. (b) ......................................... 48,000 1,079,520 ----------- 2,349,074 ----------- CONSTRUCTION MATERIALS--1.4% Texas Industries, Inc. .................................. 34,600 1,089,554 ----------- DIVERSIFIED CHEMICALS--1.4% FMC Corp. (b) ........................................... 36,000 1,086,120 ----------- DIVERSIFIED METALS & MINING--1.4% Peabody Energy Corp. .................................... 40,000 1,132,000 ----------- ELECTRIC UTILITIES--9.4% Alliant Energy Corp. .................................... 7,900 203,030 Consolidated Edison, Inc. ............................... 11,000 459,250 Northeast Utilities ..................................... 41,700 784,377 NSTAR ................................................... 19,000 850,820 OGE Energy Corp. ........................................ 52,500 1,200,150 PNM Resources, Inc. ..................................... 48,000 1,161,600 Puget Energy, Inc. ...................................... 60,200 1,243,130 Reliant Resources, Inc. (b) ............................. 53,200 465,500 WPS Resources Corp. ..................................... 25,000 1,020,750 ----------- 7,388,607 ----------- ELECTRICAL COMPONENTS & EQUIPMENT--1.8% Cooper Industries Ltd. Class A .......................... 35,500 1,395,150 ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS--5.3% Arrow Electronics, Inc. (b) ............................. 18,900 392,175 Avnet, Inc. (b) ......................................... 22,800 501,372 KEMET Corp. (b) ......................................... 76,500 1,366,290 Solectron Corp. (b) ..................................... 154,400 949,560 Tech Data Corp. (b) ..................................... 18,000 681,300 Vishay Intertechnology, Inc. (b) ........................ 15,078 331,716 ----------- 4,222,413 ----------- SHARES VALUE ------- ----------- FOOD DISTRIBUTORS--1.1% SUPERVALU, Inc. ......................................... 35,000 $ 858,550 ----------- HEALTH CARE EQUIPMENT--0.5% Beckman Coulter, Inc. ................................... 8,300 414,170 ----------- HOME IMPROVEMENT RETAIL--2.0% Hughes Supply, Inc. ..................................... 36,000 1,616,400 ----------- HOMEBUILDING--7.3% Centex Corp. ............................................ 25,700 1,485,203 KB HOME ................................................. 28,600 1,473,186 Pulte Homes, Inc. ....................................... 25,000 1,437,000 Standard Pacific Corp. .................................. 40,000 1,403,200 ----------- 5,798,589 ----------- HOTELS, RESORTS & CRUISE LINES--1.3% Royal Caribbean Cruises Ltd. ............................ 52,000 1,014,000 ----------- INDUSTRIAL MACHINERY--7.3% Eaton Corp. ............................................. 10,500 763,875 Harsco Corp. ............................................ 22,000 825,000 Kennametal, Inc. ........................................ 32,000 1,171,200 Lincoln Electric Holdings, Inc. ......................... 39,000 1,049,100 Parker-Hannifin Corp. ................................... 18,500 884,115 Reliance Steel & Aluminum Co. ........................... 35,000 1,067,500 ----------- 5,760,790 ----------- INTEGRATED OIL & GAS--1.9% Amerada Hess Corp. ...................................... 14,800 1,221,000 Occidental Petroleum Corp. .............................. 10,500 314,895 ----------- 1,535,895 ----------- INTEGRATED TELECOMMUNICATION SERVICES--0.0% WorldCom, Inc. - WorldCom Group (b)(c) .................. 250,000 22,500 ----------- LEISURE PRODUCTS--1.5% Brunswick Corp. ......................................... 43,000 1,204,000 ----------- MEAT, POULTRY & FISH--1.4% Smithfield Foods, Inc. (b) .............................. 58,000 1,075,900 ----------- MULTI-UTILITIES & UNREGULATED POWER--0.5% Sierra Pacific Resources ................................ 55,000 429,000 ----------- NETWORKING EQUIPMENT--1.3% Adaptec, Inc. (b) ....................................... 127,300 1,004,397 ----------- OIL & GAS EQUIPMENT & SERVICES--1.7% SEACOR SMIT, Inc. (b) ................................... 27,800 1,316,330 ----------- OIL & GAS EXPLORATION & PRODUCTION--1.2% Kerr-McGee Corp. ........................................ 18,000 963,900 ----------- OIL & GAS REFINING, MARKETING & TRANSPORTATION--1.7% Valero Energy Corp. ..................................... 36,300 1,358,346 ----------- PAPER PACKAGING--0.6% Temple-Inland, Inc. ..................................... 8,500 491,810 ----------- PAPER PRODUCTS--1.5% MeadWestvaco Corp. ...................................... 34,600 1,161,176 ----------- PROPERTY & CASUALTY INSURANCE--1.8% Fidelity National Financial, Inc. ....................... 46,200 1,459,920 ----------- PUBLISHING & PRINTING--1.7% Reader's Digest Association, Inc. (The) Class A ......... 71,000 1,329,830 ----------- RAILROADS--0.5% Norfolk Southern Corp. .................................. 15,400 360,052 -----------
See Notes to Financial Statements 100 PHOENIX-SANFORD BERNSTEIN MID-CAP VALUE SERIES
SHARES VALUE ------- ----------- REITS--9.3% Arden Realty, Inc. ...................................... 46,900 $ 1,334,305 Avalonbay Communities, Inc. ............................. 26,300 1,228,210 Duke Realty Corp. ....................................... 45,300 1,311,435 Liberty Property Trust .................................. 22,000 770,000 Mack-Cali Realty Corp. .................................. 40,100 1,409,515 Post Properties, Inc. ................................... 43,300 1,305,928 ----------- 7,359,393 ----------- SPECIALTY CHEMICALS--3.3% Crompton Corp. .......................................... 110,000 1,402,500 Cytec Industries, Inc. (b) .............................. 37,000 1,163,280 ----------- 2,565,780 ----------- SPECIALTY STORES--1.5% Group 1 Automotive, Inc. (b) ............................ 31,000 1,182,650 ----------- TELECOMMUNICATIONS EQUIPMENT--2.2% Andrew Corp. (b) ........................................ 57,000 816,810 Tellabs, Inc. (b) ....................................... 142,500 883,500 ----------- 1,700,310 ----------- TRADING COMPANIES & DISTRIBUTORS--0.8% Genuine Parts Co. ....................................... 17,900 624,173 ----------- TOTAL COMMON STOCKS (Identified cost $70,768,394) ........................................ 75,412,646 ----------- TOTAL LONG TERM INVESTMENTS--95.6% (Identified cost $70,768,394) ........................................ 75,412,646 ----------- SHORT-TERM OBLIGATIONS--6.1% MONEY MARKET MUTUAL FUNDS--4.9% SSgA Money Market Fund (1.65% seven day effective yield) ...................................... 3,833,459 3,833,459 ----------- PAR VALUE (000) VALUE ----- ----------- REPURCHASE AGREEMENTS--1.2% State Street Bank & Trust Co. repurchase agreement 0.85%, dated 6/28/02 due 7/1/02, repurchase price $986,070, collateralized by U.S. Treasury Note 5.50%, 8/15/28, market value $1,009,501 ............... $ 986 $ 986,000 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $4,819,459) ......................................... 4,819,459 ----------- TOTAL INVESTMENTS--101.7% (Identified Cost $75,587,853) ........................................ 80,232,105(a) Other assets and liabilities, net--(1.7)% ............................ (1,314,392) ----------- NET ASSETS--100.0% ..................................................... $78,917,713 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $8,907,705 and gross depreciation of $4,271,274 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $75,595,674. (b) Non-income producing. (c) Illiquid. Security valued at fair value as determined in good faith by or under the direction of the Trustees. At June 30, 2002, this security amounted to a value of $22,500 or 0.03% of net assets.
See Notes to Financial Statements 101 PHOENIX-SANFORD BERNSTEIN MID-CAP VALUE SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $75,587,853) ....................... $80,232,105 Cash ............................................................................... 777 Receivables Dividends and interest ........................................................... 165,630 Fund shares sold ................................................................. 143,294 ----------- Total assets ................................................................... 80,541,806 ----------- LIABILITIES Payables Investment securities purchased .................................................. 1,443,259 Fund shares repurchased .......................................................... 51,690 Investment advisory fee .......................................................... 65,209 Financial agent fee .............................................................. 8,312 Trustees' fee .................................................................... 3,717 Accrued expenses ................................................................... 51,906 ----------- Total liabilities .............................................................. 1,624,093 ----------- NET ASSETS ......................................................................... $78,917,713 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $70,785,443 Undistributed net investment income .............................................. 112,596 Accumulated net realized gain .................................................... 3,375,422 Net unrealized appreciation ...................................................... 4,644,252 ----------- NET ASSETS ......................................................................... $78,917,713 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 6,833,146 =========== Net asset value and offering price per share ....................................... $11.55 ======
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ........................................................................ $ 711,741 Interest ......................................................................... 29,393 ----------- Total investment income ........................................................ 741,134 ----------- EXPENSES Investment advisory fee .......................................................... 332,226 Financial agent fee .............................................................. 46,074 Professional ..................................................................... 14,789 Printing ......................................................................... 13,679 Custodian ........................................................................ 7,744 Trustees ......................................................................... 3,455 Miscellaneous .................................................................... 6,466 ----------- Total expenses ................................................................. 424,433 Less expenses borne by investment adviser ...................................... (22,723) ----------- Net expenses ................................................................... 401,710 ----------- NET INVESTMENT INCOME .............................................................. 339,424 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities .................................................. 3,376,386 Net change in unrealized appreciation (depreciation) on investments .............. (1,109,296) ----------- NET GAIN ON INVESTMENTS ............................................................ 2,267,090 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $ 2,606,514 ===========
See Notes to Financial Statements 102 PHOENIX-SANFORD BERNSTEIN MID-CAP VALUE SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ----------- ------------ FROM OPERATIONS Net investment income (loss) .................................................................. $ 339,424 $ 508,711 Net realized gain (loss) ...................................................................... 3,376,386 1,675,909 Net change in unrealized appreciation (depreciation) .......................................... (1,109,296) 4,436,626 ----------- ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................... 2,606,514 6,621,246 ----------- ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ......................................................................... (226,828) (475,205) Net realized short-term gains ................................................................. (183,290) (11,465) Net realized long-term gains .................................................................. (190,078) (204,655) ----------- ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ..................................... (600,196) (691,325) ----------- ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (3,107,226 and 3,715,054 shares, respectively) .................. 36,634,707 36,940,985 Net asset value of shares issued from reinvestment of distributions (51,691 and 64,377 shares, respectively) ............................................................................... 600,196 691,325 Cost of shares repurchased (750,208 and 981,403 shares, respectively) ......................... (8,879,742) (9,764,166) ----------- ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ..................................... 28,355,161 27,868,144 ----------- ------------ NET INCREASE (DECREASE) IN NET ASSETS ......................................................... 30,361,479 33,798,065 NET ASSETS Beginning of period ........................................................................... 48,556,234 14,758,169 ----------- ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $112,596 AND $0, RESPECTIVELY) $78,917,713 $ 48,556,234 =========== ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS YEAR ENDED FROM ENDED DECEMBER 31, INCEPTION 6/30/02 -------------------------- 3/2/98 TO (UNAUDITED) 2001 2000 1999 12/31/98 ----------- ------ ------ ------ ---------- Net asset value, beginning of period ............................. $10.97 $ 9.07 $ 7.82 $ 8.84 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ................................... 0.05 0.13 0.06 0.11 0.03(4) Net realized and unrealized gain (loss) ........................ 0.63 1.95 1.25 (1.02) (1.16) ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ............................. 0.68 2.08 1.31 (0.91) (1.13) ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ............................. (0.04) (0.13) (0.06) (0.11) (0.03) Distributions from net realized gains ............................ (0.06) (0.05) -- -- -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS .......................................... (0.10) (0.18) (0.06) (0.11) (0.03) ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ........................................ 0.58 1.90 1.25 (1.02) (1.16) ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ................................... $11.55 $10.97 $ 9.07 $ 7.82 $ 8.84 ====== ====== ====== ====== ====== Total return ..................................................... 6.10%(2) 22.98% 16.89% (10.28)% (11.37)%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ............................ $78,918 $48,556 $14,758 $8,635 $7,896 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(3) .......................................... 1.27%(1) 1.20%(5) 1.20%(5) 1.20% 1.20%(1) Net investment income .......................................... 1.07%(1) 1.72% 0.95% 1.40% 0.52%(1) Portfolio turnover ............................................... 21%(2) 28% 128% 29% 21%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets (including custody credits) would have been 1.34%, 1.54%, 2.39%, 2.58% and 2.77% for the periods ended June 30, 2002, December 31, 2001, 2000, 1999 and 1998, respectively. (4) Computed using average shares outstanding. (5) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 103 PHOENIX-SANFORD BERNSTEIN SMALL-CAP VALUE SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE ------- ----------- COMMON STOCKS--91.8% AEROSPACE & DEFENSE--1.6% Curtiss-Wright Corp. .................................... 1,000 $ 80,000 Moog, Inc. Class A (b) .................................. 12,550 538,144 ----------- 618,144 ----------- AGRICULTURAL PRODUCTS--1.5% Corn Products International, Inc. ....................... 19,200 597,504 ----------- APPAREL, ACCESSORIES & LUXURY GOODS--1.7% Kellwood Co. ............................................ 13,500 438,750 Vans, Inc. (b) .......................................... 27,000 219,267 ----------- 658,017 ----------- AUTO PARTS & EQUIPMENT--1.1% Modine Manufacturing Co. ................................ 17,700 435,066 ----------- BANKS--6.7% BancorpSouth, Inc. ...................................... 10,400 210,080 Bank of Hawaii Corp. .................................... 18,000 504,000 Commercial Federal Corp. ................................ 12,000 348,000 GBC Bancorp ............................................. 18,100 523,995 Hibernia Corp. Class A .................................. 24,800 490,792 Washington Federal, Inc. ................................ 16,939 427,879 Whitney Holding Corp. ................................... 3,450 106,053 ----------- 2,610,799 ----------- CASINOS & GAMING--0.4% Pinnacle Entertainment, Inc. (b) ........................ 13,000 138,190 ----------- COMPUTER STORAGE & PERIPHERALS--0.8% Hutchinson Technology, Inc. (b) ......................... 6,000 93,840 Quantum Corp. (b) ....................................... 5,000 21,000 SBS Technologies, Inc. (b) .............................. 16,000 195,984 ----------- 310,824 ----------- CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS--1.5% Terex Corp. (b) ......................................... 25,500 573,495 ----------- CONSTRUCTION MATERIALS--1.6% Texas Industries, Inc. .................................. 20,000 629,800 ----------- CONSUMER FINANCE--0.8% PFF Bancorp, Inc. ....................................... 8,200 314,880 ----------- DIVERSIFIED CHEMICALS--1.4% FMC Corp. (b) ........................................... 18,100 546,077 ----------- DIVERSIFIED METALS & MINING--2.7% Peabody Energy Corp. .................................... 13,600 384,880 RTI International Metals, Inc. (b) ...................... 54,000 656,100 ----------- 1,040,980 ----------- ELECTRIC UTILITIES--6.1% Alliant Energy Corp. .................................... 1,700 43,690 Central Vermont Public Service Corp. .................... 14,150 254,700 Empire District Electric Co. (The) ...................... 15,500 317,750 Northeast Utilities ..................................... 12,350 232,303 NSTAR ................................................... 5,200 232,856 OGE Energy Corp. ........................................ 20,800 475,488 PNM Resources, Inc. ..................................... 21,500 520,300 Wisconsin Energy Corp. .................................. 2,000 50,540 WPS Resources Corp. ..................................... 6,400 261,312 ----------- 2,388,939 ----------- SHARES VALUE ------- ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS--3.7% Avnet, Inc. (b) ......................................... 7,800 $ 171,522 CTS Corp. ............................................... 33,200 399,728 KEMET Corp. (b) ......................................... 29,500 526,870 Vishay Intertechnology, Inc. (b) ........................ 15,445 339,790 ----------- 1,437,910 ----------- GAS UTILITIES--0.4% Southwestern Energy Co. (b) ............................. 11,000 167,090 ----------- HEALTH CARE EQUIPMENT--1.2% CONMED Corp. (b) ........................................ 16,600 370,678 Mentor Corp. ............................................ 2,500 91,773 ----------- 462,451 ----------- HOME IMPROVEMENT RETAIL--1.6% Hughes Supply, Inc. ..................................... 14,200 637,580 ----------- HOMEBUILDING--5.5% KB HOME ................................................. 13,500 695,385 Pulte Homes, Inc. ....................................... 12,000 689,760 Standard Pacific Corp. .................................. 21,100 740,188 ----------- 2,125,333 ----------- HOTELS, RESORTS & CRUISE LINES--1.9% Prime Hospitality Corp. (b) ............................. 56,050 728,090 ----------- HOUSEHOLD PRODUCTS--0.9% Playtex Products, Inc. (b) .............................. 26,100 337,995 ----------- HOUSEWARES & SPECIALTIES--0.2% Russ Berrie & Co., Inc. ................................. 2,800 99,120 ----------- INDUSTRIAL MACHINERY--10.5% Esterline Technologies Corp. (b) ........................ 21,000 476,700 Gardner Denver, Inc. (b) ................................ 24,000 480,000 Harsco Corp. ............................................ 9,300 348,750 Hexcel Corp. (b) ........................................ 17,000 73,950 JLG Industries, Inc. .................................... 40,600 569,618 Kennametal, Inc. ........................................ 11,200 409,920 Lincoln Electric Holdings, Inc. ......................... 15,450 415,605 Penn Engineering & Manufacturing Corp. .................. 16,000 278,720 Regal Beloit Corp. ...................................... 19,600 476,476 Reliance Steel & Aluminum Co. ........................... 14,400 439,200 Wolverine Tube, Inc. (b) ................................ 18,000 135,900 ----------- 4,104,839 ----------- LEISURE PRODUCTS--0.8% Brunswick Corp. ......................................... 10,500 294,000 ----------- LIFE & HEALTH INSURANCE--0.7% American National Insurance Co. ......................... 2,700 260,010 ----------- MARINE--0.8% Alexander & Baldwin, Inc. ............................... 13,000 331,890 ----------- MEAT, POULTRY & FISH--1.0% Smithfield Foods, Inc. (b) .............................. 22,000 408,100 ----------- METAL & GLASS CONTAINERS--1.0% Rock-Tenn Co. Class A ................................... 20,400 374,340 ----------- MULTI-UTILITIES & UNREGULATED POWER--0.5% Sierra Pacific Resources ................................ 23,000 179,400 ----------- NETWORKING EQUIPMENT--0.8% Adaptec, Inc. (b) ....................................... 39,500 311,655 -----------
See Notes to Financial Statements 104 PHOENIX-SANFORD BERNSTEIN SMALL-CAP VALUE SERIES
SHARES VALUE ------- ----------- OIL & GAS EQUIPMENT & SERVICES--0.2% SEACOR SMIT, Inc. (b) ................................... 1,000 $ 47,350 Seitel, Inc. (b) ........................................ 20,400 20,400 ----------- 67,750 ----------- OIL & GAS EXPLORATION & PRODUCTION--0.4% Key Production Co., Inc. (b) ............................ 8,000 156,000 ----------- OIL & GAS REFINING, MARKETING & TRANSPORTATION--2.4% Tesoro Petroleum Corp. (b) .............................. 48,000 372,000 Valero Energy Corp. ..................................... 15,100 565,042 ----------- 937,042 ----------- PACKAGED FOODS AND MEATS--0.5% Del Monte Foods Co. (b) ................................. 15,700 185,260 ----------- PROPERTY & CASUALTY INSURANCE--5.1% Fidelity National Financial, Inc. ....................... 23,130 730,908 Harleysville Group, Inc. ................................ 11,400 316,008 LandAmerica Financial Group, Inc. ....................... 14,800 466,200 RLI Corp. ............................................... 9,500 484,500 ----------- 1,997,616 ----------- PUBLISHING & PRINTING--1.1% Reader's Digest Association, Inc. (The) Class A ......... 23,200 434,536 ----------- REITS--11.9% Arden Realty, Inc. ...................................... 17,000 483,650 Avalonbay Communities, Inc. ............................. 6,000 280,200 Duke Realty Corp. ....................................... 14,100 408,195 EastGroup Properties, Inc. .............................. 18,900 483,840 FelCor Lodging Trust, Inc. .............................. 19,500 357,825 Koger Equity ............................................ 19,500 376,350 Liberty Property Trust .................................. 6,400 224,000 Mack-Cali Realty Corp. .................................. 15,900 558,885 Post Properties, Inc. ................................... 16,200 488,592 RFS Hotel Investors, Inc. ............................... 37,100 502,334 Summit Properties, Inc. ................................. 20,500 478,675 ----------- 4,642,546 ----------- SPECIALTY CHEMICALS--2.5% Crompton Corp. .......................................... 42,100 536,775 Cytec Industries, Inc. (b) .............................. 13,500 424,440 ----------- 961,215 ----------- SHARES VALUE ------- ----------- SPECIALTY STORES--1.3% Group 1 Automotive, Inc. (b) ............................ 13,000 $ 495,950 ----------- STEEL--2.7% Commercial Metals Co. ................................... 15,400 722,876 GrafTech International Ltd. (b) ......................... 27,200 334,560 ----------- 1,057,436 ----------- TELECOMMUNICATIONS EQUIPMENT--1.3% Andrew Corp. (b) ........................................ 34,600 495,818 ----------- TEXTILES--0.4% Wellman, Inc. ........................................... 10,100 169,175 ----------- TRUCKING--1.1% Dollar Thrifty Automotive Group, Inc. (b) ............... 16,600 429,940 ----------- TOBACCO--1.5% Schweitzer-Mauduit International, Inc. .................. 23,900 587,940 ----------- TOTAL COMMON STOCKS (Identified cost $34,086,765) ........................................ 35,740,742 ----------- TOTAL LONG TERM INVESTMENTS--91.8% (Identified cost $34,086,765) ........................................ 35,740,742 ----------- SHORT-TERM OBLIGATIONS--11.7% MONEY MARKET MUTUAL FUNDS--4.8% SSgA Money Market Fund (1.65% seven day effective yield) ...................................... 1,878 1,877,678 ----------- PAR VALUE (000) ----- REPURCHASE AGREEMENTS--6.9% State Street Bank & Trust Co. repurchase agreement 0.85%, dated 6/28/02 due 7/1/02, repurchase price $2,658,188, collateralized by U.S. Treasury Note 5.50%, 8/15/28, market value $2,715,209 ............... $2,658 2,658,000 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $4,535,678) ......................................... 4,535,678 ----------- TOTAL INVESTMENTS--103.5% (Identified Cost $38,622,443) ........................................ 40,276,420(a) Other assets and liabilities, net--(3.5)% ............................ (1,362,258) ----------- NET ASSETS--100.0% ..................................................... $38,914,162 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $3,934,803 and gross depreciation of $2,303,079 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $38,644,696. (b) Non-income producing.
See Notes to Financial Statements 105 PHOENIX-SANFORD BERNSTEIN SMALL-CAP VALUE SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $38,622,443) ....................... $40,276,420 Cash ............................................................................... 447 Receivables Investment securities sold ....................................................... 232,537 Dividends and interest ........................................................... 54,873 Fund shares sold ................................................................. 38,206 ----------- Total assets ................................................................... 40,602,483 ----------- LIABILITIES Payables Investment securities purchased .................................................. 1,595,458 Fund shares repurchased .......................................................... 24,640 Investment advisory fee .......................................................... 24,547 Financial agent fee .............................................................. 5,725 Trustees' fee .................................................................... 3,717 Accrued expenses ................................................................... 34,234 ----------- Total liabilities .............................................................. 1,688,321 ----------- NET ASSETS ......................................................................... $38,914,162 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $36,071,548 Undistributed net investment income .............................................. 72,333 Accumulated net realized gain .................................................... 1,116,304 Net unrealized appreciation ...................................................... 1,653,977 ----------- NET ASSETS ......................................................................... $38,914,162 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 2,955,280 =========== Net asset value and offering price per share ....................................... $13.17 ======
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ........................................................................ $ 263,056 Interest ......................................................................... 13,868 ---------- Total investment income ........................................................ 276,924 ---------- EXPENSES Investment advisory fee .......................................................... 144,873 Financial agent fee .............................................................. 31,440 Professional ..................................................................... 12,798 Custodian ........................................................................ 6,653 Trustees ......................................................................... 3,455 Printing ......................................................................... 3,340 Miscellaneous .................................................................... 6,050 ---------- Total expenses ................................................................. 208,609 Less expenses borne by investment adviser ...................................... (33,219) Custodian fees paid indirectly ................................................. (7) ---------- Net expenses ................................................................... 175,383 ---------- NET INVESTMENT INCOME .............................................................. 101,541 ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities .................................................. 1,140,680 Net change in unrealized appreciation (depreciation) on investments .............. 433,064 ---------- NET GAIN ON INVESTMENTS ............................................................ 1,573,744 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $1,675,285 ==========
See Notes to Financial Statements 106 PHOENIX-SANFORD BERNSTEIN SMALL-CAP VALUE SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ----------- ----------- FROM OPERATIONS Net investment income (loss) ................................................................ $ 101,541 $ 103,088 Net realized gain (loss) .................................................................... 1,140,680 190,000 Net change in unrealized appreciation (depreciation) ........................................ 433,064 1,063,580 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................. 1,675,285 1,356,668 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ....................................................................... (29,208) (94,835) Net realized short-term gains ............................................................... (19,277) (193,131) Net realized long-term gains ................................................................ (6,134) -- ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ................................... (54,619) (287,966) ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (2,260,924 and 1,422,543 shares, respectively) ................ 29,736,277 16,278,755 Net asset value of shares issued from reinvestment of distributions (4,185 and 23,750 shares, respectively) ............................................................................. 54,619 287,966 Cost of shares repurchased (735,756 and 273,953 shares, respectively) ....................... (9,729,028) (3,096,136) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................... 20,061,868 13,470,585 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS ....................................................... 21,682,534 14,539,287 NET ASSETS Beginning of period ......................................................................... 17,231,628 2,692,341 ----------- ----------- END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $72,333 AND $0) ............. $38,914,162 $17,231,628 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED FROM INCEPTION 6/30/02 YEAR ENDED 11/20/00 TO (UNAUDITED) 12/31/01 12/31/00 ----------- ---------- -------------- Net asset value, beginning of period .......................................... $12.08 $10.62 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ................................................ 0.03 0.07 0.03 Net realized and unrealized gain ............................................ 1.08 1.59 0.62 ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .......................................... 1.11 1.66 0.65 ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ........................................ (0.01) (0.07) (0.03) Distributions from net realized gains ....................................... (0.01) (0.13) -- ------ ------ ------ TOTAL DISTRIBUTIONS ....................................................... (0.02) (0.20) (0.03) ------ ------ ------ CHANGE IN NET ASSET VALUE ..................................................... 1.09 1.46 0.62 ------ ------ ------ NET ASSET VALUE, END OF PERIOD ................................................ $13.17 $12.08 $10.62 ====== ====== ====== Total return .................................................................. 9.13%(2) 15.76% 6.44%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ......................................... $38,914 $17,232 $2,692 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(3) ....................................................... 1.27%(1)(4) 1.20%(4) 1.20%(1) Net investment income (loss) ................................................ 0.74%(1) 1.12% 2.71%(1) Portfolio turnover ............................................................ 19%(2) 18% 1%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.51%, 2.33% and 13.52% for the periods ended June 30, 2002, December 31, 2001 and 2000, respectively. (4) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 107 PHOENIX-SENECA MID-CAP GROWTH SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE ------- ----------- COMMON STOCKS--91.8% ADVERTISING--2.9% Lamar Advertising Co. (b) ............................... 50,500 $ 1,879,105 ----------- APPAREL RETAIL--5.8% Limited Brands .......................................... 86,438 1,841,129 Talbots, Inc. (The) ..................................... 54,070 1,892,450 ----------- 3,733,579 ----------- APPAREL, ACCESSORIES & LUXURY GOODS--1.8% Polo Ralph Lauren Corp. (b) ............................. 51,470 1,152,928 ----------- APPLICATION SOFTWARE--3.7% Electronic Arts, Inc. (b) ............................... 35,570 2,349,398 ----------- BANKS--3.4% Charter One Financial, Inc. ............................. 63,887 2,196,435 ----------- BROADCASTING & CABLE TV--3.1% Univision Communications, Inc. Class A (b) .............. 63,170 1,983,538 ----------- COMPUTER & ELECTRONICS RETAIL--3.0% Circuit City Stores-Circuit City Group .................. 102,080 1,914,000 ----------- ELECTRICAL COMPONENTS & EQUIPMENT--2.0% Molex, Inc. ............................................. 38,840 1,302,305 ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS--3.5% Jabil Circuit, Inc. (b) ................................. 107,670 2,272,914 ----------- HEALTH CARE DISTRIBUTORS & SERVICES--2.8% AmerisourceBergen Corp. ................................. 23,290 1,770,040 ----------- HEALTH CARE EQUIPMENT--2.5% St. Jude Medical, Inc. (b) .............................. 21,560 1,592,206 ----------- HOTELS, RESORTS & CRUISE LINES--3.4% Starwood Hotels & Resorts Worldwide, Inc. ............... 65,930 2,168,438 ----------- HOUSEHOLD APPLIANCES--3.4% Maytag Corp. ............................................ 50,820 2,167,473 ----------- HOUSEHOLD PRODUCTS--2.4% Clorox Co. (The) ........................................ 37,490 1,550,212 ----------- HOUSEWARES & SPECIALTIES--2.7% Newell Rubbermaid, Inc. ................................. 49,720 1,743,183 ----------- INDUSTRIAL GASES--3.4% Air Products and Chemicals, Inc. ........................ 42,670 2,153,555 ----------- INDUSTRIAL MACHINERY--6.6% Danaher Corp. ........................................... 31,300 2,076,755 SPX Corp. (b) ........................................... 18,590 2,184,325 ----------- 4,261,080 ----------- IT CONSULTING & SERVICES--3.0% Affiliated Computer Services, Inc. Class A (b) .......... 40,420 1,919,142 ----------- MANAGED HEALTH CARE--3.0% Aetna, Inc. ............................................. 40,810 1,957,656 ----------- METAL & GLASS CONTAINERS--3.0% Pactiv Corp. (b) ........................................ 82,010 1,951,838 ----------- PHARMACEUTICALS--3.8% Allergan, Inc. .......................................... 36,480 2,435,040 ----------- SHARES VALUE ------- ----------- SEMICONDUCTOR EQUIPMENT--2.8% Novellus Systems, Inc. (b) .............................. 51,930 $ 1,765,620 ----------- SEMICONDUCTORS--12.7% Altera Corp. (b) ........................................ 128,870 1,752,632 Atmel Corp. (b) ......................................... 223,310 1,397,921 LSI Logic Corp. (b) ..................................... 170,820 1,494,675 Micrel, Inc. (b) ........................................ 66,690 959,002 QLogic Corp. (b) ........................................ 18,780 715,518 Semtech Corp. (b) ....................................... 69,070 1,844,169 ----------- 8,163,917 ----------- SPECIALTY STORES--7.1% AutoZone, Inc. (b) ...................................... 30,020 2,320,546 Tiffany & Co. ........................................... 62,970 2,216,544 ----------- 4,537,090 ----------- TOTAL COMMON STOCKS (Identified cost $63,191,280) ........................................ 58,920,692 ----------- FOREIGN COMMON STOCKS--4.9% PHARMACEUTICALS--2.8% Biovail Corp. (Canada) (b) .............................. 61,520 1,781,619 ----------- SEMICONDUCTORS--2.1% Marvell Technology Group Ltd. (Bermuda) (b) ............. 67,890 1,350,332 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $4,455,822) ......................................... 3,131,951 ----------- TOTAL LONG TERM INVESTMENTS--96.7% (Identified cost $67,647,102) ........................................ 62,052,643 ----------- STANDARD PAR & POOR'S VALUE RATING (000) -------- ----- SHORT-TERM OBLIGATIONS--5.4% COMMERCIAL PAPER--5.4% Emerson Electric Co. 2%, 7/1/02 ................ A-1 $ 875 875,000 Receivables Capital Corp. 1.90%, 7/1/02 ........ A-1+ 650 650,000 Archer-Daniels-Midland Co. 1.77%, 7/2/02 ....... A-1 300 299,985 Verizon Network Funding Corp. 1.80%, 7/2/02 ....................................... A-1+ 150 149,992 ABSC Capital Corp. 1.80%, 7/9/02 ............... A-1+ 1,000 999,600 SBC Communications, Inc. 1.77%, 7/22/02 ...................................... A-1+ 500 499,484 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $3,474,061) ......................................... 3,474,061 ----------- TOTAL INVESTMENTS--102.1% (Identified Cost $71,121,163) ........................................ 65,526,704(a) Other assets and liabilities, net--(2.1)% ............................ (1,342,838) ----------- NET ASSETS--100.0% ..................................................... $64,183,866 =========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $2,698,882 and gross depreciation of $8,293,341 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $71,121,163. (b) Non-income producing.
See Notes to Financial Statements 108 PHOENIX-SENECA MID-CAP GROWTH SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $71,121,163) ....................... $ 65,526,704 Receivables Fund shares sold ................................................................. 29,285 Dividends and interest ........................................................... 14,863 ------------ Total assets ................................................................... 65,570,852 ------------ LIABILITIES Cash overdraft ..................................................................... 306 Payables Investment securities purchased .................................................. 1,185,355 Fund shares repurchased .......................................................... 63,297 Investment advisory fee .......................................................... 43,932 Financial agent fee .............................................................. 8,411 Trustees' fee .................................................................... 3,717 Accrued expenses ................................................................... 81,968 ------------ Total liabilities .............................................................. 1,386,986 ------------ NET ASSETS ......................................................................... $ 64,183,866 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $ 95,569,031 Accumulated net investment loss .................................................. (209,969) Accumulated net realized loss .................................................... (25,580,737) Net unrealized depreciation ...................................................... (5,594,459) ------------ NET ASSETS ......................................................................... $ 64,183,866 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 5,661,655 ============ Net asset value and offering price per share ....................................... $11.34 ======
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ........................................................................ $ 119,441 Interest ......................................................................... 46,389 ------------ Total investment income ........................................................ 165,830 ------------ EXPENSES Investment advisory fee .......................................................... 281,158 Financial agent fee .............................................................. 49,621 Printing ......................................................................... 17,449 Professional ..................................................................... 15,158 Custodian ........................................................................ 4,598 Trustees ......................................................................... 3,455 Miscellaneous .................................................................... 4,379 ------------ Total expenses ................................................................. 375,818 Custodian fees paid indirectly ................................................. (19) ------------ Net expenses ................................................................... 375,799 ------------ NET INVESTMENT LOSS ................................................................ (209,969) ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................. (3,103,271) Net change in unrealized appreciation (depreciation) on investments .............. (8,071,179) ------------ NET LOSS ON INVESTMENTS ............................................................ (11,174,450) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $(11,384,419) ============
See Notes to Financial Statements 109 PHOENIX-SENECA MID-CAP GROWTH SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ----------- ----------- FROM OPERATIONS Net investment income (loss) ................................................................ $ (209,969) $ (357,510) Net realized gain (loss) .................................................................... (3,103,271) (19,873,580) Net change in unrealized appreciation (depreciation) ........................................ (8,071,179) (550,926) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................. (11,384,419) (20,782,016) ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (1,259,197 and 2,791,753 shares, respectively) ................ 16,372,560 41,997,776 Cost of shares repurchased (749,775 and 1,607,612 shares, respectively) ..................... (9,699,133) (23,336,210) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................... 6,673,427 18,661,566 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS ....................................................... (4,710,992) (2,120,450) NET ASSETS Beginning of period ......................................................................... 68,894,858 71,015,308 ----------- ----------- END OF PERIOD (INCLUDING ACCUMULATED NET INVESTMENT LOSS OF ($209,969) AND $0, RESPECTIVELY) ............................................................................. $64,183,866 $68,894,858 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS YEAR ENDED FROM ENDED DECEMBER 31, INCEPTION 6/30/02 -------------------------- 3/2/98 TO (UNAUDITED) 2001 2000 1999 12/31/98 ----------- ------ ------ ------ ---------- Net asset value, beginning of period ............................ $13.37 $17.90 $17.28 $12.16 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(4) ............................... (0.04) (0.08) (0.06) -- 0.01 Net realized and unrealized gain (loss) ....................... (1.99) (4.45) 2.51 5.54 2.16 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ............................ (2.03) (4.53) 2.45 5.54 2.17 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income .......................... -- -- -- -- (0.01) Distributions from net realized gains ......................... -- -- (1.83) (0.42) -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS ......................................... -- -- (1.83) (0.42) (0.01) ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ....................................... (2.03) (4.53) 0.62 5.12 2.16 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD .................................. $11.34 $13.37 $17.90 $17.28 $12.16 ====== ====== ====== ====== ====== Total return .................................................... (15.22)%(2) (25.28)% 13.75% 45.62% 21.75%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ........................... $64,184 $68,895 $71,015 $21,857 $7,897 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(3) ......................................... 1.07%(1)(5) 1.05%(5) 1.05% 1.05% 1.05%(1) Net investment income (loss) .................................. (0.60)%(1) (0.52)% (0.28)% (0.33)% 0.15%(1) Portfolio turnover .............................................. 61%(2) 137% 97% 169% 127%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.10%, 1.19%, 2.04% and 2.82% for the periods ended December 31, 2001, 2000, 1999 and 1998, respectively. (4) Computed using average shares outstanding. (5) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 110 PHOENIX-SENECA STRATEGIC THEME SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE -------- ----------- COMMON STOCKS--93.8% AIR FREIGHT & COURIERS--3.5% United Parcel Service, Inc. Class B ..................... 54,300 $ 3,353,025 ----------- BROADCASTING & CABLE TV--3.5% Clear Channel Communications, Inc. (b) .................. 104,160 3,335,203 ----------- COMPUTER HARDWARE--5.3% Dell Computer Corp. (b) ................................. 162,770 4,254,808 International Business Machines Corp. ................... 12,700 914,400 ----------- 5,169,208 ----------- DIVERSIFIED FINANCIAL SERVICES--12.7% American Express Co. .................................... 92,520 3,360,326 Citigroup, Inc. ......................................... 103,306 4,003,108 Goldman Sachs Group, Inc. (The) ......................... 66,400 4,870,440 ----------- 12,233,874 ----------- HEALTH CARE EQUIPMENT--7.9% Baxter International, Inc. .............................. 76,220 3,387,979 Medtronic, Inc. ......................................... 98,320 4,213,012 ----------- 7,600,991 ----------- HEALTH CARE FACILITIES--3.5% HCA, Inc. ............................................... 70,400 3,344,000 ----------- HOME IMPROVEMENT RETAIL--3.0% Home Depot, Inc. (The) .................................. 79,200 2,909,016 ----------- HOTELS, RESORTS & CRUISE LINES--3.3% Starwood Hotels & Resorts Worldwide, Inc. ............... 97,720 3,214,011 ----------- HOUSEHOLD PRODUCTS--3.4% Procter & Gamble Co. (The) .............................. 37,200 3,321,960 ----------- INDUSTRIAL MACHINERY--9.7% Danaher Corp. ........................................... 74,420 4,937,767 SPX Corp. (b) ........................................... 37,500 4,406,250 ----------- 9,344,017 ----------- MANAGED HEALTH CARE--3.8% Aetna, Inc. ............................................. 77,080 3,697,527 ----------- MOVIES & ENTERTAINMENT--4.4% Viacom, Inc. Class B (b) ................................ 95,910 4,255,527 ----------- SEMICONDUCTOR EQUIPMENT--3.1% Applied Materials, Inc. (b) ............................. 157,480 2,995,270 ----------- SEMICONDUCTORS--14.2% Intel Corp. ............................................. 170,270 3,110,833 Micron Technology, Inc. (b) ............................. 179,090 3,621,200 Texas Instruments, Inc. ................................. 179,530 4,254,861 Xilinx, Inc. (b) ........................................ 122,080 2,738,254 ----------- 13,725,148 ----------- SOFT DRINKS--4.0% PepsiCo, Inc. ........................................... 79,460 3,829,972 ----------- SPECIALTY STORES--4.4% Tiffany & Co. ........................................... 122,140 4,299,328 ----------- SYSTEMS SOFTWARE--4.1% Microsoft Corp. (b) ..................................... 73,300 4,009,510 ----------- TOTAL COMMON STOCKS (Identified cost $103,629,110) ....................................... 90,637,587 ----------- SHARES VALUE -------- ----------- FOREIGN COMMON STOCKS--4.5% SEMICONDUCTORS--4.5% Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan) (b) .......................................... 332,882 $ 4,327,466 ----------- TOTAL FOREIGN COMMON STOCKS (Identified cost $4,876,581) ......................................... 4,327,466 ----------- TOTAL LONG TERM INVESTMENTS--98.3% (Identified cost $108,505,691) ....................................... 94,965,053 ----------- STANDARD PAR & POOR'S VALUE RATING (000) -------- ------ SHORT-TERM OBLIGATIONS--1.3% COMMERCIAL PAPER--1.3% Ciesco LP 1.90%, 7/2/02 ........................... A-1+ $1,255 1,254,933 ----------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $1,254,934) ......................................... 1,254,933 ----------- TOTAL INVESTMENTS--99.6% (Identified Cost $109,760,625) ....................................... 96,219,986(a) Other assets and liabilities, net--0.4% .............................. 399,402 ----------- NET ASSETS--100.0% ..................................................... $96,619,388 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $2,835,203 and gross depreciation of $16,375,842 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $109,760,625. (b) Non-income producing.
See Notes to Financial Statements 111 PHOENIX-SENECA STRATEGIC THEME SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $109,760,625) ...................... $ 96,219,986 Cash ............................................................................... 179 Receivables Investment securities sold ....................................................... 5,188,490 Fund shares sold ................................................................. 24,023 Dividends and interest ........................................................... 6,374 ------------ Total assets ................................................................... 101,439,052 ------------ LIABILITIES Payables Investment securities purchased .................................................. 4,480,517 Fund shares repurchased .......................................................... 122,170 Investment advisory fee .......................................................... 64,022 Financial agent fee .............................................................. 11,575 Trustees' fee .................................................................... 3,717 Accrued expenses ................................................................... 137,663 ------------ Total liabilities .............................................................. 4,819,664 ------------ NET ASSETS ......................................................................... $ 96,619,388 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $194,993,243 Accumulated net investment loss .................................................. (331,437) Accumulated net realized loss .................................................... (84,501,779) Net unrealized depreciation ...................................................... (13,540,639) ------------ NET ASSETS ......................................................................... $ 96,619,388 ============ Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 11,494,499 ============ Net asset value and offering price per share ....................................... $8.41 =====
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ........................................................................ $ 231,636 Interest ......................................................................... 54,180 Foreign tax withheld ............................................................. (15,395) ------------ Total investment income ........................................................ 270,421 ------------ EXPENSES Investment advisory fee .......................................................... 464,273 Financial agent fee .............................................................. 72,508 Printing ......................................................................... 30,852 Professional ..................................................................... 15,580 Custodian ........................................................................ 9,562 Trustees ......................................................................... 3,455 Miscellaneous .................................................................... 5,894 ------------ Total expenses ................................................................. 602,124 Custodian fees paid indirectly ................................................. (266) ------------ Net expenses ................................................................... 601,858 ------------ NET INVESTMENT LOSS ................................................................ (331,437) ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................. (8,026,468) Net change in unrealized appreciation (depreciation) on investments .............. (22,437,334) ------------ NET LOSS ON INVESTMENTS ............................................................ (30,463,802) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $(30,795,239) ============
See Notes to Financial Statements 112 PHOENIX-SENECA STRATEGIC THEME SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ----------- ------------ FROM OPERATIONS Net investment income (loss) ................................................................ $ (331,437) $ (490,864) Net realized gain (loss) .................................................................... (8,026,468) (70,937,839) Net change in unrealized appreciation (depreciation) ........................................ (22,437,334) 15,104,041 ----------- ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................. (30,795,239) (56,324,662) ----------- ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net realized short-term gains ............................................................... -- (4,577,499) Net realized long-term gains ................................................................ -- (41,567) ----------- ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ................................... -- (4,619,066) ----------- ------------ FROM SHARE TRANSACTIONS Proceeds from sales of shares (862,644 and 3,047,646 shares, respectively) .................. 8,878,083 38,481,933 Net asset value of shares issued from reinvestment of distributions (0 and 352,756 shares, respectively) ............................................................................. -- 4,619,066 Cost of shares repurchased (2,135,546 and 3,750,199 shares, respectively) ................... (21,559,677) (45,578,210) ----------- ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................... (12,681,594) (2,477,211) ----------- ------------ NET INCREASE (DECREASE) IN NET ASSETS ....................................................... (43,476,833) (63,420,939) NET ASSETS Beginning of period ......................................................................... 140,096,221 203,517,160 ----------- ------------ END OF PERIOD (INCLUDING ACCUMULATED NET INVESTMENT LOSS OF $($331,437) AND $0, RESPECTIVELY) $96,619,388 $140,096,221 =========== ============
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, 6/30/02 -------------------------------------------------- (UNAUDITED) 2001 2000 1999 1998 1997 ----------- ------ ------ ------ ------ ------ Net asset value, beginning of period .............. $10.97 $15.52 $20.21 $15.40 $11.32 $10.98 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) .................... (0.03) (0.04)(3) (0.07)(3) -- 0.01 0.05 Net realized and unrealized gain (loss) ......... (2.53) (4.15) (2.20) 8.19 5.03 1.82 ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .............. (2.56) (4.19) (2.27) 8.19 5.04 1.87 ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ............ -- -- -- -- (0.01) (0.05) Distributions from net realized gains ........... -- (0.36) (2.42) (2.91) (0.95) (1.47) Tax return of capital ........................... -- -- -- (0.47) -- (0.01) ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS ........................... -- (0.36) (2.42) (3.38) (0.96) (1.53) ------ ------ ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ......................... (2.56) (4.55) (4.69) 4.81 4.08 0.34 ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD .................... $ 8.41 $10.97 $15.52 $20.21 $15.40 $11.32 ====== ====== ====== ====== ====== ====== Total return ...................................... (23.39)%(5) (27.36)% (11.46)% 54.98% 44.69% 17.16% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ............. $96,619 $140,096 $203,517 $177,351 $75,098 $47,620 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(1) ........................... 0.97%(2)(4) 0.96%(2) 0.92% 0.97% 0.99% 1.00% Net investment income (loss) .................... (0.54)%(4) (0.30)% (0.32)% (0.18)% (0.01)% 0.42% Portfolio turnover ................................ 58%(5) 162% 118% 150% 364% 642% (1) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.14% for the periods ended December 31, 1997. (2) The ratio of operating expenses to average net assets excludes the effect of expense offsets from custodian fees if expense offsets were included, the ratio would not significantly differ. (3) Computed using average shares outstanding. (4) Annualized. (5) Not annualized.
See Notes to Financial Statements 113 PHOENIX-VAN KAMPEN FOCUS EQUITY SERIES SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
SHARES VALUE ------ ---------- COMMON STOCKS--95.5% AEROSPACE & DEFENSE--2.0% General Dynamics Corp. .................................. 1,400 $ 148,890 ---------- BANKS--1.2% Bank of New York Co., Inc. (The) ........................ 2,700 91,125 ---------- BIOTECHNOLOGY--1.1% Amgen, Inc. (b) ......................................... 1,375 57,585 Gilead Sciences, Inc. (b) ............................... 700 23,016 ---------- 80,601 ---------- BROADCASTING & CABLE TV--1.5% Liberty Media Corp. Class A (b) ......................... 7,648 76,480 Univision Communications, Inc. Class A (b) .............. 1,125 35,325 ---------- 111,805 ---------- COMPUTER HARDWARE--2.9% Dell Computer Corp. (b) ................................. 5,550 145,077 International Business Machines Corp. ................... 950 68,400 ---------- 213,477 ---------- CONSUMER FINANCE--2.5% Capital One Financial Corp. ............................. 2,975 181,624 ---------- DATA PROCESSING SERVICES--1.7% First Data Corp. ........................................ 3,275 121,830 ---------- DIVERSIFIED FINANCIAL SERVICES--11.5% American Express Co. .................................... 1,200 43,584 Citigroup, Inc. ......................................... 8,708 337,435 Freddie Mac ............................................. 5,850 358,020 Goldman Sachs Group, Inc. (The) ......................... 1,500 110,025 ---------- 849,064 ---------- GENERAL MERCHANDISE STORES--5.8% BJ's Wholesale Club, Inc. (b) ........................... 2,425 93,362 Wal-Mart Stores, Inc. ................................... 6,150 338,312 ---------- 431,674 ---------- HEALTH CARE DISTRIBUTORS & SERVICES--2.5% Laboratory Corporation of America Holdings (b) .......... 4,050 184,882 ---------- HEALTH CARE EQUIPMENT--2.2% Baxter International, Inc. .............................. 1,525 67,786 Medtronic, Inc. ......................................... 2,275 97,484 ---------- 165,270 ---------- HEALTH CARE FACILITIES--2.1% HCA, Inc. ............................................... 3,250 154,375 ---------- HOME IMPROVEMENT RETAIL--3.5% Home Depot, Inc. (The) .................................. 7,050 258,946 ---------- HOUSEHOLD PRODUCTS--2.3% Procter & Gamble Co. (The) .............................. 1,925 171,902 ---------- INDUSTRIAL CONGLOMERATES--7.4% General Electric Co. .................................... 18,750 544,688 ---------- INTEGRATED TELECOMMUNICATION SERVICES--1.7% Verizon Communications, Inc. ............................ 3,160 126,874 ---------- MOVIES & ENTERTAINMENT--2.2% Viacom, Inc. Class B (b) ................................ 3,600 159,732 ---------- MULTI-LINE INSURANCE--2.4% American International Group, Inc. ...................... 2,600 177,398 ---------- SHARES VALUE ------ ---------- NETWORKING EQUIPMENT--2.6% Cisco Systems, Inc. (b) ................................. 13,800 $ 192,510 ---------- OIL & GAS EQUIPMENT & SERVICES--3.4% Baker Hughes, Inc. ...................................... 5,550 184,760 BJ Services Co. (b) ..................................... 1,925 65,219 ---------- 249,979 ---------- PHARMACEUTICALS--11.9% Johnson & Johnson ....................................... 3,175 165,926 Pfizer, Inc. ............................................ 12,300 430,500 Wyeth ................................................... 5,475 280,320 ---------- 876,746 ---------- SEMICONDUCTOR EQUIPMENT--1.0% Applied Materials, Inc. (b) ............................. 4,050 77,031 ---------- SEMICONDUCTORS--6.2% Intel Corp. ............................................. 11,825 216,043 Linear Technology Corp. ................................. 2,075 65,217 Maxim Integrated Products, Inc. (b) ..................... 625 23,956 Texas Instruments, Inc. ................................. 5,625 133,313 Xilinx, Inc. (b) ........................................ 800 17,944 ---------- 456,473 ---------- SOFT DRINKS--3.6% Coca-Cola Co. (The) ..................................... 3,325 186,200 PepsiCo, Inc. ........................................... 1,590 76,638 ---------- 262,838 ---------- SYSTEMS SOFTWARE--7.7% Microsoft Corp. (b) ..................................... 9,275 507,343 Oracle Corp. (b) ........................................ 4,600 43,562 VERITAS Software Corp. (b) .............................. 1,075 21,274 ---------- 572,179 ---------- TELECOMMUNICATIONS EQUIPMENT--0.4% QUALCOMM, Inc. (b) ...................................... 1,125 30,926 ---------- TOBACCO--2.2% Philip Morris Cos., Inc. ................................ 3,700 161,616 ---------- TOTAL COMMON STOCKS (Identified cost $8,157,814) ......................................... 7,054,455 ---------- TOTAL LONG TERM INVESTMENTS--95.5% (Identified cost $8,157,814) ......................................... 7,054,455 ========== PAR VALUE (000) ----- SHORT-TERM OBLIGATIONS--4.1% REPURCHASE AGREEMENTS--4.1% State Street Bank & Trust Co. repurchase agreement, 0.25% dated 6/28/02 due 7/1/02, repurchase price $303,006 collateralized by U.S. Treasury Note 6.75%, 5/15/05, market value $313,500 ................. $303 303,000 ---------- TOTAL SHORT-TERM OBLIGATIONS (Identified cost $303,000) ........................................... 303,000 ---------- TOTAL INVESTMENTS--99.6% (Identified Cost $8,460,814) ......................................... 7,357,455(a) Other assets and liabilities, net--0.4% .............................. 28,506 ---------- NET ASSETS--100.0% ..................................................... $7,385,961 ========== (a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $97,818 and gross depreciation of $2,013,277 for federal income tax purposes. At June 30, 2002, the aggregate cost of securities for federal income tax purposes was $9,272,914. (b) Non-income producing.
See Notes to Financial Statements 114 PHOENIX-VAN KAMPEN FOCUS EQUITY SERIES
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED) ASSETS Investment securities at value (Identified cost $8,460,814) ........................ $ 7,357,455 Cash ............................................................................... 759 Receivables Investment securities sold ....................................................... 260,424 Fund shares sold ................................................................. 17,280 Receivable from adviser .......................................................... 6,239 Dividends and interest ........................................................... 6,039 ----------- Total assets ................................................................... 7,648,196 ----------- LIABILITIES Payables Investment securities purchased .................................................. 156,859 Fund shares repurchased .......................................................... 1,605 Printing fee ..................................................................... 72,872 Professional fee ................................................................. 17,095 Financial agent fee .............................................................. 3,976 Trustees' fee .................................................................... 3,717 Accrued expenses ................................................................... 6,111 ----------- Total liabilities .............................................................. 262,235 ----------- NET ASSETS ......................................................................... $ 7,385,961 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest ................................. $11,261,943 Accumulated net investment loss .................................................. (9,471) Accumulated net realized loss .................................................... (2,763,152) Net unrealized depreciation ...................................................... (1,103,359) ----------- NET ASSETS ......................................................................... $ 7,385,961 =========== Shares of beneficial interest outstanding, $1 par value, unlimited authorization ... 1,163,897 =========== Net asset value and offering price per share ....................................... $6.35 =====
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) INVESTMENT INCOME Dividends ........................................................................ $ 33,759 Interest ......................................................................... 508 ----------- Total investment income ........................................................ 34,267 ----------- EXPENSES Investment advisory fee .......................................................... 34,862 Financial agent fee .............................................................. 23,483 Professional ..................................................................... 17,501 Printing ......................................................................... 14,399 Custodian ........................................................................ 11,436 Trustees ......................................................................... 3,455 Miscellaneous .................................................................... 3,080 ----------- Total expenses ................................................................. 108,216 Less expenses borne by investment adviser ...................................... (64,478) ----------- Net expenses ................................................................... 43,738 ----------- NET INVESTMENT LOSS ................................................................ (9,471) ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities .................................................. (511,650) Net change in unrealized appreciation (depreciation) on investments .............. (1,197,152) ----------- NET LOSS ON INVESTMENTS ............................................................ (1,708,802) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $(1,718,273) ===========
See Notes to Financial Statements 115 PHOENIX-VAN KAMPEN FOCUS EQUITY SERIES
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED 6/30/02 YEAR ENDED (UNAUDITED) 12/31/01 ----------- ----------- FROM OPERATIONS Net investment income (loss) ................................................................ $ (9,471) $ (17,294) Net realized gain (loss) .................................................................... (511,650) (1,924,289) Net change in unrealized appreciation (depreciation) ........................................ (1,197,152) 596,807 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................. (1,718,273) (1,344,776) ----------- ----------- FROM SHARE TRANSACTIONS Proceeds from sales of shares (188,896 and 563,359 shares, respectively) .................... 1,369,890 4,704,187 Cost of shares repurchased (124,244 and 239,892 shares, respectively) ....................... (875,456) (1,904,735) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS ................................... 494,434 2,799,452 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS ........................................................... (1,223,839) 1,454,676 NET ASSETS Beginning of period ......................................................................... 8,609,800 7,155,124 ----------- ----------- END OF PERIOD (INCLUDING ACCUMULATED NET INVESTMENT LOSS OF ($9,471) AND $0, RESPECTIVELY) . $ 7,385,961 $ 8,609,800 =========== ===========
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) SIX MONTHS YEAR ENDED ENDED DECEMBER 31, FROM INCEPTION 6/30/02 ------------------ 12/15/99 TO (UNAUDITED) 2001 2000 12/31/99 ----------- ------ ------ -------------- Net asset value, beginning of period ................................. $ 7.83 $ 9.22 $10.63 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) ....................................... (0.01) (0.02)(5) (0.04)(5) -- Net realized and unrealized gain (loss) ............................ (1.47) (1.37) (1.36) 0.63 ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ................................. (1.48) (1.39) (1.40) 0.63 ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income ............................... -- -- --(4) -- Distributions from net realized gains .............................. -- -- (0.01) -- ------ ------ ------ ------ TOTAL DISTRIBUTIONS .............................................. -- -- (0.01) -- ------ ------ ------ ------ CHANGE IN NET ASSET VALUE ............................................ (1.48) (1.39) (1.41) 0.63 ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ....................................... $ 6.35 $ 7.83 $ 9.22 $10.63 ====== ====== ====== ====== Total return ......................................................... (18.98)%(2) (15.08)% (13.16)% 6.31%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) ................................ $7,386 $8,610 $7,155 $5,402 RATIO TO AVERAGE NET ASSETS OF: Operating expenses (3) ............................................. 1.07%(1) 1.00%(6) 1.00% 1.00%(1) Net investment income (loss) ....................................... (0.23)%(1) (0.21)% (0.34)% 0.39%(1) Portfolio turnover ................................................... 67%(2) 110% 86% 2%(2) (1) Annualized. (2) Not annualized. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 2.64%, 3.18%, 2.90% and 8.11% for the periods ended June 30, 2002, December 31, 2001, 2000 and 1999, respectively. (4) Amount is less than $0.01. (5) Computed using average shares outstanding. (6) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 116 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 (UNAUDITED) NOTE 1--ORGANIZATION The Phoenix Edge Series Fund (the "Fund") is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund was established as part of the December 8, 1986 reorganization of the Phoenix Life Variable Accumulation Account (the "Account") from a management investment company to a unit investment trust under the Investment Company Act of 1940. The Fund is organized with Series which are available only to the subaccounts of the Phoenix Life Variable Accumulation Account, Phoenix Life Variable Universal Life Account, PHL Variable Accumulation Account, PHL Variable Universal Life Account, Phoenix Life and Annuity Variable Universal Life Account, and Phoenix Life Separate Accounts B, C and D. The Fund is comprised of 27 Series each having a distinct investment objective as outlined below:
- ---------------------------------------------------------------------------------------------------------------------------------- FUND NAME INVESTMENT OBJECTIVE - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen International Series ("Aberdeen International") High total return consistent with reasonable risk. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen New Asia Series ("Aberdeen New Asia") Long-term capital appreciation. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-AIM Mid-Cap Equity Series ("AIM Mid-Cap Equity") Long-term growth of capital. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Growth + Value Series Long-term capital growth. ("Alliance/Bernstein Growth + Value") - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Deutsche Dow 30 Series ("Deutsche Dow 30") Track the total return of the Dow Jones Industrial Average(SM) before fund expenses. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Deutsche Nasdaq-100 Index(R) Series ("Deutsche Nasdaq-100 Track the total return of the NASDAQ 100 Index(R) before Index(R)") fund expenses. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate Securities Series Capital appreciation and income with approximately equal ("Duff & Phelps Real Estate Securities") emphasis. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Capital Growth Series ("Engemann Intermediate and long-term growth of capital, with income Capital Growth") as a secondary consideration. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Small & Mid-Cap Growth Series Long-term growth of capital by normally investing at least ("Engemann Small & Mid-Cap Growth") 80% of assets in equities of "small-cap" and "mid-cap" companies with market capitalization under $2.5 billion. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Federated U.S. Government Bond Series Maximize total return by investing primarily in debt ("Federated U.S. Government Bond") obligations of the U.S. Government, its agencies and instrumentalities. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Money Market Series Provide maximum current income consistent with capital ("Goodwin Money Market") preservation and liquidity. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income Series Long-term total return. ("Goodwin Multi-Sector Fixed Income") - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Hollister Value Equity Series Long-term capital appreciation and a secondary investment ("Hollister Value Equity") objective to seek current income. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-J.P. Morgan Research Enhanced Index Series High total return by investing in a broadly diversified ("J.P. Morgan Research Enhanced Index") portfolio of equity securities of large and medium capitalization companies within market sectors reflected in the S&P 500. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Janus Flexible Income Series Maximum total return consistent with the preservation of ("Janus Flexible Income") capital. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Janus Growth Series ("Janus Growth") Long-term capital growth consistent with the preservation of capital. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-MFS Investors Growth Stock Series Long-term growth of capital and future income rather than ("MFS Investors Growth Stock") current income. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-MFS Investors Trust Series ("MFS Investors Trust") Long-term growth of capital and secondarily to provide reasonable current income. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-MFS Value Series ("MFS Value") Capital appreciation and reasonable income. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Oakhurst Growth and Income Series Dividend growth, current income and capital appreciation ("Oakhurst Growth and Income") by investing in common stocks. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Oakhurst Strategic Allocation Series Realize as high a level of total rate of return over an ("Oakhurst Strategic Allocation") extended period of time as is considered consistent with prudent investment risk. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Global Value Series Long-term capital appreciation through investing in foreign ("Sanford Bernstein Global Value") and domestic equity securities. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value Series Long-term capital appreciation with current income as the ("Sanford Bernstein Mid-Cap Value") secondary investment objective. - ----------------------------------------------------------------------------------------------------------------------------------
117 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2002 (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------------- FUND NAME INVESTMENT OBJECTIVE - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value Series Long-term capital appreciation by investing primarily in ("Sanford Bernstein Small-Cap Value") small-capitalization stocks the adviser believes are undervalued. Current income is a secondary objective. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth Series Capital appreciation primarily through investments in equity ("Seneca Mid-Cap Growth") securities of companies that have the potential for above average market appreciation. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme Series Long-term appreciation of capital by identifying securities ("Seneca Strategic Theme") benefiting from long-term trends present in the United States and abroad. - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Van Kampen Focus Equity Series ("Van Kampen Focus Equity") Capital appreciation by investing primarily in equity (formerly Phoenix-Morgan Stanley Focus Equity Series) securities. - ----------------------------------------------------------------------------------------------------------------------------------
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates. A. SECURITY VALUATION Equity securities are valued at the last sale price, or if there had been no sale that day, at the last bid price. Debt securities are valued on the basis of broker quotations or valuations provided by a pricing service which utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities in determining value. Short-term investments having a remaining maturity of 60 days or less are valued at amortized cost which approximates market. All other securities and assets are valued at their fair value as determined in good faith by or under the direction of the Trustees. Certain securities held by the following Series were valued on the basis of a price provided by a principal market maker. The prices provided by the principal market makers may differ from the value that would be realized if the securities were sold. At June 30, 2002, the total value of securities for which prices were provided by principal market makers represented (approximately) the following percentages of net assets: SERIES PERCENTAGE OF NET ASSETS ------ ------------------------ Goodwin Multi-Sector Fixed Income ............... 6.3% Goodwin Money Market uses the amortized cost method of security valuation which, in the opinion of the Trustees, represents the fair value of the particular security. The Trustees monitor the deviations between the Series' net asset value per share as determined by using available market quotations and its net asset value per share using amortized cost. If the deviation exceeds 1/2 of 1%, the Board of Trustees will consider what action, if any, should be initiated to provide fair valuation. The Series attempts to maintain a constant net asset value of $10 per share. B. SECURITY TRANSACTIONS AND RELATED INCOME Security transactions are recorded on the trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date, or in the case of certain foreign securities, as soon as the Fund is notified. The Fund amortizes premiums and discounts using the effective interest method. Realized gains and losses are determined on the identified cost basis. Effective January 1, 2001, the Fund adopted the revised AICPA Audit and Accounting Guide, Audits of Investment Companies and began to amortize premium on fixed income securities and classify gains and losses on mortgage- and asset-backed securities previously included in realized gains and losses, as a component of interest income. The cumulative effect of the accounting changes had no impact on total net assets of the Fund or the Fund's net asset value, but resulted in reductions to the cost of securities, corresponding increases in net unrealized appreciation (depreciation), and equivalent decreases in undistributed net investment income based on securities held by each Series on December 31, 2000 as detailed below:
REDUCTION IN INCREASE IN UNREALIZED SERIES COST OF SECURITIES APPRECIATION (DEPRECIATION) ------ ------------------ --------------------------- Engemann Capital Growth ...................... $ 876 $ 876 Federated U.S. Government Bond ............... 30,566 30,566 Goodwin Multi-Sector Fixed Income ............ 63,340 63,340 Janus Flexible Income ........................ 2,585 2,585 Oakhurst Strategic Allocation ................ 75,019 75,019
118 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2002 (UNAUDITED) The effect of this change for the year ended December 31, 2001 was to increase (decrease) net investment income, increase (decrease) net unrealized appreciation (depreciation) and increase (decrease) net realized gains (losses) for each Series as detailed below. The statement of changes in net assets and financial highlights for the prior periods have not been restated to reflect this change.
INCREASE (DECREASE) IN NET UNREALIZED NET REALIZED NET INVESTMENT APPRECIATION GAINS SERIES INCOME (DEPRECIATION) (LOSSES) ------ ---------------------- -------------- ------------ Engemann Capital Growth ............................. $ (30,601) $ 26,722 $ 3,879 Federated U.S. Government Bond ...................... (38,093) 28,391 9,702 Goodwin Multi-Sector Fixed Income ................... 13,561 23,682 (37,243) J.P. Morgan Research Enhanced Index ................. (3,041) 832 2,209 Janus Flexible Income ............................... (20,066) 7,394 12,672 Oakhurst Strategic Allocation ....................... (141,191) 138,357 2,834
C. INCOME TAXES Each of the Series is treated as a separate taxable entity. It is the policy of each Series to comply with the requirements of the Internal Revenue Code (the "Code"), applicable to regulated investment companies, and to distribute all of its taxable income to its shareholders. To the extent that any Series does not distribute substantially all of its taxable earnings, it will be subject to a 4% non-deductible excise tax. D. DISTRIBUTIONS TO SHAREHOLDERS Distributions are recorded by each Series on the ex-dividend date and all distributions are reinvested into the Fund. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards, foreign currency gain/loss, gain/loss on futures contracts, partnerships, and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. Certain distribution amounts have been reclassified to conform to the current year presentation. E. FOREIGN CURRENCY TRANSLATION Foreign securities and other assets and liabilities are valued using the foreign currency exchange rate effective at the end of the reporting period. Cost of investments is translated at the currency exchange rate effective at the trade date. The gain or loss resulting from a change in currency exchange rates between the trade and settlement dates of a portfolio transaction is treated as a gain or loss on foreign currency. Likewise, the gain or loss resulting from a change in currency exchange rates between the date income is accrued and paid is treated as a gain or loss on foreign currency. The Fund does not separate that portion of the results of operations arising from changes in exchange rates and that portion arising from changes in the market prices of securities. F. FORWARD CURRENCY CONTRACTS Certain Series may enter into forward currency contracts in conjunction with the planned purchase or sale of foreign denominated securities in order to hedge the U.S. dollar cost or proceeds. Forward currency contracts involve, to varying degrees, elements of market risk in excess of the amount recognized in the Statement of Assets and Liabilities. Risks arise from the possible movements in foreign exchange rates or if the counterparty does not perform under the contract. A forward currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded directly between currency traders and their customers. The contract is marked-to-market daily and the change in market value is recorded by the Series as an unrealized gain (or loss). When the contract is closed or offset with the same counterparty, the Series records a realized gain (or loss) equal to the change in the value of the contract when it was opened and the value at the time it was closed or offset. G. FUTURES CONTRACTS Certain Series may enter into financial futures contracts as a hedge against anticipated changes in the market value of their portfolio securities. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. Upon entering into a futures contract, the Series is required to pledge to the broker an amount of cash and/or securities equal to the "initial margin" requirements of the futures exchange on which the contract is traded. Pursuant to the contract, the Series agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as "variation margins" and are recorded by the Series as unrealized gains or losses. When the contract is closed, the Series records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The potential risks to the Series are that the change in value of the futures contract may not correspond to the change in value of the hedged instruments and the counterparty may not fulfill its contractual obligations related to the contract. H. OPTIONS Certain Series may write covered options or purchase options contracts for the purpose of hedging against changes in the market value of the underlying securities or foreign currencies. Each Series will realize a gain or loss upon the expiration or closing of the option transaction. Gains and losses on written options are reported separately in the Statement of Operations. When a written option is exercised, the proceeds on sales or amounts paid are adjusted by the amount of premium received. Options written are reported as a liability in the Statement of Assets and Liabilities and 119 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2002 (UNAUDITED) subsequently marked-to-market to reflect the current value of the option. The risk associated with written options is that the change in value of options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, or if a liquid secondary market does not exist for the contracts. Each Series may purchase options which are included in the Series' Schedule of Investments and subsequently marked-to-market to reflect the current value of the option. When a purchased option is exercised, the cost of the security is adjusted by the amount of premium paid. The risk associated with purchased options is limited to the premium paid. At June 30, 2002, the Fund had no options outstanding. I. EXPENSES Expenses incurred by the Fund with respect to any two or more Series are allocated in proportion to the net assets of each Series, except where allocation of direct expense to each Series or an alternative allocation method can be more fairly made. J. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS Certain Series may engage in when-issued or delayed delivery transactions. The Series record when-issued securities on the trade date and maintain collateral for the securities purchased. Securities purchased on a when-issued or delayed delivery basis begin earning interest on the settlement date. K. REPURCHASE AGREEMENTS A repurchase agreement is a transaction where a Series acquires a security for cash and obtains a simultaneous commitment from the seller to repurchase the security at an agreed upon price and date. The Series, through its custodian, takes possession of securities collateralizing the repurchase agreement. The collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Series in the event of default by the seller. If the seller defaults and the value of the collateral declines or, if the seller enters insolvency proceedings, realization of collateral may be delayed or limited. L. SWAP AGREEMENTS Certain Series may invest in swap agreements for the purpose of hedging against changes in interest rates or foreign currencies. Swap agreements involve the exchange by the Series with another party of their respective commitments to pay or receive interest, (e.g., an exchange of floating rate payments for fixed rate payments) with respect to a notional amount of principal. Swaps are marked to market daily based upon quotations from market makers and the change, if any, is recorded as an unrealized gain or loss in the Statement of Operations. Net payments of interest are recorded as interest income. Entering into these agreements involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreement may default on its obligation to perform and that there may be unfavorable changes in the fluctuation of interest and/or exchange rates. At June 30, 2002, the Fund had no swap agreements outstanding. M. LOAN AGREEMENTS Certain Series may invest in direct debt instruments which are interests in amounts owed by a corporate, governmental, or other borrower to lenders or lending syndicates. The Fund's investments in loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties. A loan is often administered by a bank or other financial institution (the lender) that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. When investing in a loan participation, the Fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the loan agreement and only upon receipt by the lender of payments from the borrower. The Fund generally has no right to enforce compliance with the terms of the loan agreement with the borrower. As a result, the Fund may be subject to the credit risk of both the borrower and the lender that is selling the loan agreement. When the Fund purchases assignments from lenders it acquires direct rights against the borrower on the loan. Direct indebtedness of emerging countries involves a risk that the government entities responsible for the repayment of the debt may be unable, or unwilling to pay the principal and interest when due. NOTE 3--INVESTMENT ADVISORY FEES AND RELATED PARTY TRANSACTIONS The Advisers to the Fund are Phoenix Investment Counsel, Inc. ("PIC"), Phoenix Variable Advisers, Inc. ("PVA"), Phoenix-Aberdeen International Advisers, LLC ("PAIA"), and Duff & Phelps Investment Management Co. ("DPIM"). As a compensation for their services to the Fund, the Advisers are entitled to a fee based upon the following annual rates as a percentage of the average daily net assets of each separate Series listed below:
RATE FOR FIRST RATE FOR NEXT RATE FOR OVER SERIES ADVISER $250 MILLION $250 MILLION $500 MILLION ------ ------- -------------- ------------- ------------- Aberdeen International .......................... PIC 0.75% 0.70% 0.65% Aberdeen New Asia ............................... PAIA 1.00 1.00 1.00 AIM Mid-Cap Equity .............................. PVA 0.85 0.85 0.85 Alliance/Bernstein Growth + Value ............... PVA 0.85 0.85 0.85 Deutsche Dow 30 ................................. PVA 0.35 0.35 0.35 Deutsche Nasdaq-100 Index(R) .................... PVA 0.35 0.35 0.35 Engemann Capital Growth ......................... PIC 0.70 0.65 0.60 Engemann Small & Mid-Cap Growth ................. PIC 0.90 0.90 0.90 Federated U.S. Government Bond .................. PVA 0.60 0.60 0.60 Goodwin Money Market ............................ PIC 0.40 0.35 0.30 Goodwin Multi-Sector Fixed Income ............... PIC 0.50 0.45 0.40 Hollister Value Equity .......................... PIC 0.70 0.65 0.60
120 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2002 (UNAUDITED)
RATE FOR FIRST RATE FOR NEXT RATE FOR OVER SERIES (CONTINUED) ADVISER $250 MILLION $250 MILLION $500 MILLION ------ ------- -------------- ------------- ------------- J.P. Morgan Research Enhanced Index ...................... PVA 0.45% 0.45% 0.45% Janus Flexible Income .................................... PVA 0.80 0.80 0.80 Janus Growth ............................................. PVA 0.85 0.85 0.85 MFS Investors Growth Stock ............................... PVA 0.75 0.75 0.75 MFS Investors Trust ...................................... PVA 0.75 0.75 0.75 MFS Value ................................................ PVA 0.75 0.75 0.75 Oakhurst Growth and Income ............................... PIC 0.70 0.65 0.60 Oakhurst Strategic Allocation ............................ PIC 0.60 0.55 0.50 Sanford Bernstein Global Value ........................... PVA 0.90 0.90 0.90 Sanford Bernstein Mid-Cap Value .......................... PVA 1.05 1.05 1.05 Sanford Bernstein Small Cap Value ........................ PVA 1.05 1.05 1.05 Seneca Mid-Cap Growth .................................... PIC 0.80 0.80 0.80 Seneca Strategic Theme ................................... PIC 0.75 0.70 0.65 Van Kampen Focus Equity .................................. PVA 0.85 0.85 0.85 RATE FOR FIRST RATE FOR NEXT RATE FOR OVER $1 BILLION $1 BILLION $2 BILLION -------------- ------------- ------------- Duff & Phelps Real Estate Securities ..................... DPIM 0.75 0.70 0.65
Pursuant to a subadvisory agreement with the Fund, certain advisers delegate certain investment decisions and research functions with respect to the following Series to the subadvisor indicated, for which services each is paid a fee by the respective adviser.
SERIES SUBADVISER ------ ---------- Aberdeen International Aberdeen Fund Managers, Inc. ("Aberdeen") Aberdeen New Asia Aberdeen Fund Managers, Inc. ("Aberdeen") and Phoenix Investment Council ("PIC") AIM Mid-Cap Equity A I M Capital Management ("AIM") Alliance/Bernstein Growth + Value Alliance Capital Management ("Alliance") Deutsche Dow 30 Deutsche Asset-Management ("DAMI") Deutsche Nasdaq-100 Index(R) Deutsche Asset-Management ("DAMI") Engemann Capital Growth Roger Engemann & Associates ("Engemann") Engemann Small & Mid-Cap Growth Roger Engemann & Associates ("Engemann") Federated U.S. Government Bond Federated Investment Management Company ("Federated") J.P. Morgan Research Enhanced Index J.P. Morgan Investment Management, Inc. ("J.P. Morgan") Janus Flexible Income Janus Capital Corporation ("Janus") Janus Growth Janus Capital Corporation ("Janus") MFS Investors Growth Stock MFS Investment Management ("MFS") MFS Investors Trust MFS Investment Management ("MFS") MFS Value MFS Investment Management ("MFS") Sanford Bernstein Global Value Alliance Capital Management L.P. ("Alliance") Sanford Bernstein Mid-Cap Value Alliance Capital Management L.P. ("Alliance") Sanford Bernstein Small Cap Value Alliance Capital Management L.P. ("Alliance") Seneca Mid-Cap Growth Seneca Capital Management, LLC ("Seneca") Seneca Strategic Theme Seneca Capital Management, LLC ("Seneca") Van Kampen Focus Equity Morgan Stanley Investment Management ("MSIM")
PIC, PVA, and PAIA employ subadvisors to furnish portfolio management services to the Series, subject to Investment Subadvisory Agreements, the terms of which are described below. PIC is an indirect wholly-owned subsidiary of Phoenix Investment Partners, Ltd. DPIM is a subsidiary of Phoenix Investment Partners, Ltd. Roger Engemann & Associates, Inc. is a wholly-owned subsidiary of Pasadena Capital Corporation, which in turn is a wholly-owned subsidiary of Phoenix Investment Partners, Ltd. A majority of the equity interest of Seneca Capital Management LLC are owned by Phoenix Investment Partners, Ltd. Phoenix Investment Partners in turn is a wholly-owned subsidiary of The Phoenix Companies, Inc. PIC has engaged Aberdeen Fund Managers, Inc. ("Aberdeen") as a subadvisor to the Aberdeen International. Aberdeen provides the day-to-day portfolio management for this Series. For implementing certain portfolio transactions and providing other services to this Series, PIC pays a monthly fee to Aberdeen based on an annual percentage of the average daily net assets of this Series of 0.375% on the first $250 million, 0.35% of such value between $250 million to $500 million and 0.325% of such value in excess of $500 million. Aberdeen is a wholly-owned subsidiary of Aberdeen Asset Management PLC, of which Phoenix Life Insurance Company ("Phoenix") owns approximately 20%. PAIA has engaged Aberdeen as a subadvisor to the Aberdeen New Asia. PAIA has also engaged PIC to implement domestic cash management for this Series. Aberdeen provides all other day-to-day investment operations for this Series including international portfolio management. For implementing certain portfolio transactions and providing research and other services to this Series, PAIA pays a monthly fee to Aberdeen based on an annual percentage of 0.40% the average daily net assets of this Series. PAIA has engaged PIC as a subadvisor to the Aberdeen New Asia to implement domestic cash management for this series. Aberdeen Fund Managers, Inc. provides all other day-to-day investment operations for this Series including international portfolio management. For providing research and other domestic advisory services to the series, PAIA pays a monthly fee to PIC based on an annual percentage of 0.30% of the average daily net assets of this Series. 121 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2002 (UNAUDITED) Pursuant to a subadvisory agreement between PVA and AIM Capital Management, Inc. ("AIM"), AIM is the subadvisor and furnishes portfolio management services to AIM Mid-Cap Equity. For the services provided, PVA pays a monthly fee to AIM based on an annual percentage of 0.50% of the average daily net assets of this Series. Pursuant to a subadvisory agreement between PVA and Alliance Capital Management L.P. ("Alliance"), Alliance is the subadvisor and furnishes portfolio management services to Alliance/Bernstein Growth + Value. Alliance will manage the portion of this Series' assets invested in value stocks through its Bernstein Investment Research and Management unit (the "Bernstein Unit"). For the services provided through December 31, 2002, PVA pays a monthly fee to Alliance based on an annual percentage of 0.50% of the average daily net assets of this Series. Pursuant to subadvisory agreements between PVA and Alliance, Alliance, through its Bernstein Unit, is the subadvisor and furnishes portfolio management services, including affecting the purchase and sales of securities and providing related advisory services, to the Sanford Bernstein Global Value, Sanford Bernstein Mid-Cap Value and Sanford Bernstein Small-Cap Value Series. For the services provided, PVA pays a monthly fee to Alliance based on an annual percentage of the average daily net assets of the series as follows:
RATE FOR FIRST RATE FOR NEXT RATE FOR NEXT RATE FOR NEXT RATE FOR OVER SERIES(1) $25 MILLION $25 MILLION $25 MILLION $100 MILLION $175 MILLION ------ -------------- ------------- ------------- ------------- ------------- Sanford Bernstein Global Value ............. 0.65% 0.50% 0.45% 0.40% 0.30% Sanford Bernstein Mid-Cap Value ............ 0.80 0.60 0.60 0.60 0.60 RATE FOR FIRST RATE FOR NEXT RATE FOR OVER $10 MILLION $10 MILLION $20 MILLION -------------- ------------- ------------- Sanford Bernstein Small-Cap Value .......... 1.00 0.875 0.75 (1) The series subadvised by the Bernstein Unit receive a 10% reduction in fees for all or a portion of these series' assets when certain assets of the series exceed $10 million. As a result of this reduction in fees, the current rate for calculating subadvisory fees for the Phoenix-Sanford Bernstein Small-Cap Value Series is 0.80% of average daily net assets.
Pursuant to a subadvisory agreement between PVA and Deutsche Asset Management, Inc. ("DAMI"), DAMI is the subadvisor and provides portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Deutsche Trust Dow 30 and Deutsche Nasdaq-100 Index(R) Series. For the services provided, PVA pays a monthly fee to DAMI (subject to a $100,000 annual minimum for each Series) based on an annual percentage of 0.10% of the average daily net assets of each of these Series. Pursuant to a subadvisory agreement between PIC and Roger Engemann & Associates ("Engemann") with respect to the Engemann Capital Growth and Phoenix-Engemann Small & Mid-Cap Growth, Engemann is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to these Series. For the services provided, PIC pays a monthly fee to Engemann for the Phoenix-Engemann Capital Growth Series based on an annual percentage of the average daily net assets of 0.10% up to $3 billion and 0.30% of such value in excess of $3 billion; and for Engemann Small & Mid-Cap Growth based on an annual percentage of the average daily net assets of 0.45%. Pursuant to a subadvisory agreement between PVA and Federated Investment Management Company ("Federated"), Federated is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Federated U.S. Government Bond. For the services provided, PVA pays a monthly fee to Federated based on an annual percentage of the average daily net assets of this Series of 0.30% up to $25 million, 0.25% of such value between $25 million and $50 million, 0.20% of such value between $50 million and $100 million and a negotiable fee on such value in excess of $100 million. Pursuant to a subadvisory agreement between the Fund, PVA, and J.P. Morgan Investment Management Inc. ("J.P. Morgan"), J.P. Morgan is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the J.P. Morgan Research Enhanced Index. For the services provided, PVA pays a monthly fee to J.P. Morgan based on an annual percentage of the average daily net assets of this Series of 0.25% up to $100 million and 0.20% on such value in excess of $100 million. Pursuant to a subadvisory agreement between PVA and Janus Capital Corporation ("Janus"), Janus is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Janus Flexible Income and Janus Growth. For the services provided, PVA pays a monthly fee to Janus based on an annual percentage of the average daily net assets of each of these Series (calculated separately, not in the aggregate) of 0.55% up to $100 million, 0.50% of such value between $100 million and $500 million and 0.45% on such value in excess of $500 million. Pursuant to a subadvisory agreement between PVA and Massachusetts Financial Services Company, Inc., doing business as MFS Investment Management ("MFS"), MFS is the subadvisor and furnishes portfolio management services to the MFS Investors Growth Stock, MFS Investors Trust, and MFS Value. For the services provided, PVA pays a monthly fee to MFS based on an annual percentage of the combined average daily net assets of all three of these Series of 0.375% up to $500 million, 0.35% on such value between $500 million and $900 million, 0.325% on such value between $900 million and $1.5 billion and 0.25% on such value in excess of $1.5 billion. 122 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2002 (UNAUDITED) Pursuant to a subadvisory agreement between PVA and Morgan Stanley Investment Management ("MSIM"), MSIM is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Van Kampen Focus Equity. For the services provided, PVA pays a monthly fee to MSIM based on an annual percentage of the average daily net assets of this Series of 0.55% up to $150 million, 0.45% on such value between $150 million and $300 million and 0.40% on such value in excess of $300 million. Pursuant to a subadvisory agreement between the Fund, PIC and Seneca Capital Management, LLC ("Seneca") with respect to the Seneca Mid-Cap Growth, and pursuant to a subadvisory agreement between PIC and Seneca with respect to the Seneca Strategic Theme, Seneca is the subadvisor and furnishes portfolio management services, including effecting the purchase and sales of securities and providing related advisory services, to the Seneca Mid-Cap Growth and Seneca Strategic Theme. For the services provided, PIC pays a monthly fee to Seneca for the Seneca Mid-Cap Growth based on an annual percentage of the average daily net assets of 0.40%; and for the Seneca Strategic Theme based on an annual percentage of the average daily net assets of 0.10% up to $201 million, 0.375% of such value between $202 million and $1 billion, 0.35% of such value between $1 billion and $2 billion and 0.325% on such value in excess of $2 billion. The advisors have agreed to reimburse the Fund for certain operating expenses (excluding management fees, interest, taxes, brokerage fees and commissions) for all series. For the six months ended June 30, 2002, the portion of these expenses to be paid by each series is listed in the following table. All expense reimbursement arrangements may be discontinued at any time.
MAXIMUM OPERATING MAXIMUM OPERATING EXPENSE THROUGH EXPENSE EFFECTIVE SERIES 4/30/02 5/1/02 ------ ----------------- ----------------- Aberdeen International .................................. 0.40% 0.40% Aberdeen New Asia ....................................... 0.30 0.35 AIM Mid-Cap Equity ...................................... 0.20 0.25 Alliance/Bernstein Growth + Value ....................... 0.20 0.25 Deutsche Dow 30 ......................................... 0.20 0.25 Deutsche Nasdaq-100 Index(R) ............................ 0.20 0.25 Duff & Phelps Real Estate Securities .................... 0.30 0.35 Engemann Capital Growth ................................. 0.20 0.25 Engemann Small & Mid-Cap Growth ......................... 0.30 0.35 Federated U.S Government Bond ........................... 0.25 0.30 Goodwin Money Market .................................... 0.20 0.25 Goodwin Multi-Sector Fixed Income ....................... 0.20 0.25 Hollister Value Equity .................................. 0.20 0.25 J.P. Morgan Research Enhanced Index ..................... 0.15 0.20 Janus Flexible Income ................................... 0.20 0.25 Janus Growth ............................................ 0.20 0.25 MFS Investors Growth Stock .............................. 0.20 0.25 MFS Investors Trust ..................................... 0.20 0.25 MFS Value ............................................... 0.20 0.25 Oakhurst Growth & Income ................................ 0.20 0.25 Oakhurst Strategic Allocation ........................... 0.20 0.25 Sanford Bernstein Global Value .......................... 0.20 0.25 Sanford Bernstein Mid-Cap Value ......................... 0.20 0.25 Sanford Bernstein Small-Cap Value ....................... 0.20 0.25 Seneca Mid-Cap Growth ................................... 0.30 0.35 Seneca Strategic Theme .................................. 0.30 0.35 Van Kampen Focus Equity ................................. 0.20 0.25
As Financial Agent to the Fund and to each Series, Phoenix Equity Planning Corporation ("PEPCO"), an indirect majority-owned subsidiary of Phoenix, receives a financial agent fee equal to the sum of (1) the documented cost of fund accounting and related services provided by PFPC, Inc. (subagent to PEPCO), plus (2) the documented cost to PEPCO to provide financial reporting, tax services and oversight of subagent's performance. For the six months ended June 30, 2002, financial agent fees were $1,444,942 of which PEPCO received $561,331. The current fee schedule of PFPC, Inc. ranges from 0.085% to 0.0125% of the average daily net asset values of the Fund. Certain minimum fees and fee waivers may apply. For the six months ended June 30, 2002, the Fund paid PXP Securities Corp., a wholly owned subsidiary of Phoenix, brokerage commissions of $92,815 in connection with portfolio transactions effected by it. 123 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2002 (UNAUDITED) At June 30, 2002, Phoenix and affiliates held shares in The Phoenix Edge Series Fund which had the following aggregate value:
AIM Mid-Cap Equity ................................................................................................. $3,118,496 Alliance/Bernstein Growth + Value .................................................................................. 2,228,834 Deutsche Dow 30 .................................................................................................... 1,018,746 Deutsche Nasdaq-100 Index(R) ....................................................................................... 1,371,456 Engemann Small & Mid-Cap Growth .................................................................................... 1,828,615 Federated U.S. Government Bond ..................................................................................... 6,169,236 Janus Flexible Income .............................................................................................. 1,457,888 MFS Investors Growth Stock ......................................................................................... 2,612,477 MFS Investors Trust ................................................................................................ 2,702,987 MFS Value .......................................................................................................... 3,042,864 Sanford Bernstein Global Value ..................................................................................... 6,362,378 Sanford Bernstein Mid-Cap Value .................................................................................... 561,541 Sanford Bernstein Small-Cap Value .................................................................................. 633,158 Van Kampen Focus Equity ............................................................................................ 3,078,195
NOTE 4--PURCHASES AND SALES OF SECURITIES Purchases and sales of securities during the six months ended June 30, 2002, (excluding U.S. Government securities, short-term securities, options written and forward currency contracts) aggregated to the following:
PURCHASES SALES ------------ ------------ Aberdeen International ......................................................................... $ 25,006,268 $ 34,144,959 Aberdeen New Asia .............................................................................. 2,272,364 1,436,772 AIM Mid-Cap Equity ............................................................................. 2,899,931 993,919 Alliance/Bernstein Growth + Value .............................................................. 2,177,194 538,567 Deutsche Dow 30 ................................................................................ 6,083,989 5,609,713 Deutsche Nasdaq-100 Index(R) ................................................................... 3,148,159 1,426,426 Duff & Phelps Real Estate Securities ........................................................... 10,865,779 4,198,096 Engemann Capital Growth ........................................................................ 683,296,667 765,757,059 Engemann Small & Mid-Cap Growth ................................................................ 5,434,389 4,559,436 Goodwin Multi-Sector Fixed Income .............................................................. 119,347,798 124,374,901 Hollister Value Equity ......................................................................... 72,787,168 65,382,738 J.P. Morgan Research Enhanced Index ............................................................ 25,434,901 20,444,070 Janus Flexible Income .......................................................................... 23,863,326 21,141,172 Janus Growth ................................................................................... 28,813,425 26,674,593 MFS Investors Growth Stock ..................................................................... 5,756,686 3,886,851 MFS Investors Trust ............................................................................ 2,128,315 1,569,331 MFS Value ...................................................................................... 8,734,116 1,527,778 Oakhurst Growth and Income ..................................................................... 26,120,047 22,983,843 Oakhurst Strategic Allocation .................................................................. 127,166,940 128,366,137 Sanford Bernstein Global Value ................................................................. 4,343,355 1,843,886 Sanford Bernstein Mid-Cap Value ................................................................ 39,020,523 12,834,274 Sanford Bernstein Small Cap Value .............................................................. 22,814,162 4,943,066 Seneca Mid-Cap Growth .......................................................................... 46,989,781 39,818,988 Seneca Strategic Theme ......................................................................... 67,688,103 78,358,626 Van Kampen Focus Equity ........................................................................ 5,380,733 5,044,545
There were no purchases or sales of such securities in the Federated U.S. Government Bond Series or the Goodwin Money Market Series. Purchases and sales of long-term U.S. Government securities during the six months ended June 30, 2002, aggregated the following:
PURCHASES SALES ----------- ----------- Engemann Capital Growth ........................................................................ $ -- $ 2,558,250 Federated U.S. Government Bond ................................................................. -- 303,536 Goodwin Multi-Sector Fixed Income .............................................................. 74,533,215 58,558,094 Janus Flexible Income .......................................................................... 26,958,467 25,014,725 Oakhurst Strategic Allocation .................................................................. 34,437,424 65,387,258 Van Kampen Focus Equity ........................................................................ 250,801 273,917
124 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2002 (UNAUDITED) NOTE 5--FUTURES CONTRACTS At June 30, 2002, the following Series had entered into futures contracts as follows:
VALUE OF NET NUMBER CONTRACTS MARKET UNREALIZED EXPIRATION OF WHEN VALUE OF APPRECIATION DATE CONTRACTS OPENED CONTRACTS (DEPRECIATION) ------------- --------- ---------- --------- -------------- Deutsche Dow 30 Dow Jones Industrial Average Index .................. September '02 3 $ 190,300 $ 184,600 $ (5,700) Deutsche Nasdaq-100 Index(R) Nasdaq-100 Index .................................... September '02 8 174,470 168,640 (5,830) J.P. Morgan Research Enhanced Index Standard and Poor's 500 Index ....................... September '02 3 777,050 742,575 (34,475)
NOTE 6--CREDIT RISK AND CONCENTRATIONS In countries with limited or developing markets, investments may present greater risks than in more developed markets and the prices of such investments may be volatile. The consequences of political, social or economic changes in these markets may have disruptive effects on the market prices of these investments and the income they generate, as well as a Fund's ability to repatriate such amounts. High yield-high risk securities typically entail greater price volatility and principal and interest rate risk. There is a greater chance that an issuer will not be able to make principal and interest payments on time. Analysis of the creditworthiness of issuers of high yield securities may be complex, and as a result, it may be more difficult for the subadviser to accurately predict risk. Certain Series invest a high percentage of their assets in specific sectors of the market in their pursuit of a greater investment return. Fluctuations in these sectors of concentration may have a greater impact to the Series, positive or negative, than if the Series did not concentrate its investments in such sectors. NOTE 7--FEDERAL INCOME TAX INFORMATION The following Series have capital loss carryovers which may be used to offset future capital gains.
EXPIRATION YEAR --------------------------------------------------------------- 2006 2007 2008 2009 TOTAL ---------- ----------- ---------- ------------ ------------ Aberdeen International .................................... $ -- $ -- $ -- $ 25,954,026 $ 25,954,026 Aberdeen New Asia ......................................... 1,280,431 -- -- 295,786 1,576,217 Deutsche Nasdaq-100 Index(R) .............................. -- -- 35,822 1,090,517 1,126,339 Engemann Capital Growth ................................... -- -- -- 281,539,240 281,539,240 Engemann Small & Mid-Cap Growth ........................... -- -- 302,334 1,838,456 2,140,790 Duff & Phelps Real Estate Securities ...................... -- 20,308 815,184 -- 835,492 Goodwin Multi-Sector Fixed Income ......................... 566,989 15,256,521 6,659,630 4,980,791 27,463,931 Hollister Value Equity .................................... -- -- -- 5,410,594 5,410,594 J.P. Morgan Research Enhanced Index ....................... -- -- -- 5,915,199 5,915,199 Janus Growth .............................................. -- -- 1,736,897 15,462,439 17,199,336 Oakhurst Growth and Income ................................ -- -- -- 3,195,522 3,195,522 Oakhurst Strategic Allocation ............................. -- -- -- 6,255,397 6,255,397 Seneca Mid Growth ......................................... -- -- -- 21,438,903 21,438,903 Seneca Strategic Theme .................................... -- -- -- 74,025,180 74,025,180 Van Kampen Focus Equity ................................... -- -- 179,842 1,190,743 1,370,585
125 THE PHOENIX EDGE SERIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2002 (UNAUDITED) NOTE 8--MERGERS On March 22, 2002, Janus Growth ("Growth") acquired all of the net assets of Janus Core Equity ("Core Equity") pursuant to an Agreement and Plan of Reorganization approved by Core Equity shareholders on March 18, 2002. The acquisition was accomplished by a tax-free exchange of 3,141,426 shares of Growth valued at $22,032,065 for 2,467,046 shares of Core Equity outstanding on March 22, 2002. Core Equity's net assets on that date of $22,032,065, including $1,473,521 of net unrealized appreciation were combined with those of Growth. The aggregate net assets of Growth immediately after the merger were $90,807,708. On April 5, 2002, Engemann Capital Growth ("Capital Growth") acquired all of the net assets of Engemann Nifty Fifty ("Nifty Fifty") pursuant to an Agreement and Plan of Reorganization approved by Nifty Fifty shareholders on March 18, 2002. The acquisition was accomplished by a tax-free exchange of 2,949,789 shares of Capital Growth valued at $39,773,479 for 4,885,261 shares of Nifty Fifty outstanding on April 5, 2002. Nifty Fifty's net assets on that date of $39,773,479, including $7,975,458 of net unrealized depreciation were combined with those of Capital Growth. The aggregate net assets of Capital Growth immediately after the merger were $862,917,192. On April 5, 2002, Oakhurst Strategic Allocation ("Strategic Allocation") acquired all of the net assets of Oakhurst Balanced ("Balanced") pursuant to an Agreement and Plan of Reorganization approved by Balanced shareholders on March 18, 2002. The acquisition was accomplished by a tax-free exchange of 17,438,879 shares of Strategic Allocation valued at $236,890,944 for 19,697,824 shares of Balanced outstanding on April 5, 2002. Balanced's net assets on that date of $236,890,944, including $25,034,492 of net unrealized appreciation were combined with those of Strategic Allocation. The aggregate net assets of Strategic Allocation immediately after the merger were $582,665,031. This report is not authorized for distribution to prospective investors in The Phoenix Edge Series Fund unless preceded or accompanied by any effective Prospectus which includes information concerning the sales charges, Fund's record and other pertinent information. 126 THE PHOENIX EDGE SERIES FUND 101 Munson Street Greenfield, Massachusetts 01301 BOARD OF TRUSTEES Frank M. Ellmer, CPA John A. Fabian Roger A. Gelfenbien Eunice S. Groark Frank E. Grzelecki John R. Mallin Timothy P. Shriver Simon Y. Tan Dona D. Young EXECUTIVE OFFICERS Simon Y. Tan, President Michael E. Haylon, Executive Vice President Michael J. Gilotti, Executive Vice President J. Roger Engemann, Senior Vice President Gail P. Seneca, Senior Vice President James D. Wehr, Senior Vice President Hugh Young, Senior Vice President David L. Albrycht, Vice President Malcolm Axon, Vice President Christian C. Bertelsen, Vice President Doreen A. Bonner, Vice President, Compliance Officer & Assistant Secretary Steven L. Colton, Vice President Timothy Devlin, Vice President Ronald K. Jacks, Vice President Richard D. Little, Vice President James E. Mair, Vice President Chester S. Sokolosky, Vice President Julie L. Sapia, Vice President Michael Schatt, Vice President John S. Tilson, Vice President Richard J. Wirth, Vice President, Secretary & Counsel Nancy G. Curtiss, Vice President, Treasurer, and Principal Accounting Officer INVESTMENT ADVISORS Phoenix Investment Counsel, Inc. 56 Prospect Street Hartford, Connecticut 06115-0480 Duff & Phelps Investment Management Co. 55 East Monroe Street, Suite 3600 Chicago, Illinois 60603 Phoenix-Aberdeen International Advisors, LLC One American Row Hartford, Connecticut 06102-5056 Phoenix Variable Advisors, Inc. One American Row Hartford, Connecticut 06102-5056 CUSTODIANS JP Morgan Chase Bank 270 Park Avenue New York, New York 10017-2070 Brown Brothers Harriman & Co. 40 Water Street Boston, Massachusetts 02109 State Street Bank and Trust Company 225 Franklin Street Boston, Massachusetts 02110 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP 160 Federal Street Boston, Massachusetts 02110 THIS PAGE INTENTIONALLY BLANK. THIS PAGE INTENTIONALLY BLANK. PHOENIX LIFE INSURANCE COMPANY ------------------- P.O. Box 22012 PRSRT STD Albany, NY 12201-2012 U.S. Postage P A I D Andrew Associates ------------------- Phoenix Life Insurance Company www.phoenixwm.com GO144SAR (C)Phoenix Life Insurance company [GRAPHIC OMITTED] PRINTED ON RECYCLED PAPER. 8-02
Phoenix-Van Kampen Focus Equity Series / Phoenix-Janus Growth Series / Phoenix-MFS Investors Growth Stock Series Pro Forma Combining Schedule of Investments September 30, 2002 (Unaudited) Shares VALUE ========= ========= ========= ======== ========================= ============ ========== =========== ======== Phoenix- Phoenix- Phoenix- Pro Forma DESCRIPTION Phoenix-MFS Phoenix- Phoenix-Van Pro Forma MFS Janus Van Combining Investors Janus Kampen Combining Investors Growth Kampen Portfolios Growth Stock Growth Focus Equity Portfolios Growth Series Focus Series Series Series Stock Equity Series Series ========= ========= ========= ======== ========================= =========== ========== =========== ======== COMMON STOCKS --92.3% 940 - 300 1,240 3M Co. 103,372 - 32,991 136,363 1,500 - - 1,500 Abbott Laboratories 60,600 - - 60,600 1,050 - - 1,050 AFLAC, INC. 32,224 - - 32,224 - 32,815 - 32,815 Allstate Corp. (The) - 1,166,573 - 1,166,573 340 - 3,700 4,040 American Express Co. 10,601 - 115,366 125,967 1,070 - 2,650 3,720 American International 58,529 - 144,955 203,484 Group, Inc. 1,390 16,605 3,515 21,510 Amgen, Inc. 57,963 692,428 146,575 896,966 - 36,625 - 36,625 Anadarko Petroleum Corp. - 1,631,278 - 1,631,278 1,900 - - 1,900 Analog Devices, Inc. 37,430 - - 37,430 1,050 43,190 2,925 47,165 Anheuser-Busch Cos., Inc. 53,130 2,185,414 148,005 2,386,549 4,000 81,065 - 85,065 AOL Time Warner, Inc. 46,800 948,460 - 995,260 330 - - 330 Apache Corp. 19,619 - - 19,619 Applied Materials, 1,000 83,190 2,375 86,565 Inc. 11,550 960,845 27,431 999,826 1,500 - - 1,500 AT&T Corp. 18,015 - - 18,015 - 39,275 - 39,275 Automatic Data Processing, Inc. - 1,365,592 - 1,365,592 1,660 - - 1,660 Avon Products, Inc. 76,526 - - 76,526 - - 4,325 4,325 Baker Hughes, Inc. - - 125,555 125,555 400 - - 400 Bank of America Corp. 25,520 - - 25,520 - 55,575 2,250 57,825 Bank of New York Co., Inc. - 1,597,225 64,665 1,661,890 (The) 1,130 - - 1,130 Baxter International, Inc. 34,521 - - 34,521 910 - 1,225 2,135 Bed Bath & Beyond, Inc. 29,639 - 39,898 69,537 - 150 - 150 Berkshire Hathaway, Inc. - 369,750 - 369,750 Class B 800 - - 800 Best Buy Co., Inc. 17,848 - - 17,848 100 - - 100 Biogen, Inc. 2,927 - - 2,927 - - 1,925 1,925 BJ Services Co. - - 50,050 50,050 700 - - 700 Boston Scientific Corp. 22,092 - - 22,092 - 94,191 - 94,191 Cablevision Systems New - 853,371 - 853,371 York Group Class A 1,130 - - 1,130 Cadence Design Systems, Inc. 11,492 - - 11,492 500 - - 500 Capital One Financial Corp. 17,460 - - 17,460 1,100 - - 1,100 Cardinal Health, Inc. 68,420 - - 68,420 720 - - 720 Carnival Corp. 18,072 - - 18,072 320 - - 320 Chubb Corp. (The) 17,546 - - 17,546 8,270 - 10,000 18,270 Cisco Systems, Inc. 86,670 - 104,800 191,470 2,970 30,609 8,863 42,442 Citigroup, Inc. 88,061 907,557 262,788 1,258,406 2,530 - - 2,530 Clear Channel 87,917 - - 87,917 Communications, Inc. - - 3,100 3,100 Coca-Cola Co. (The) - - 148,676 148,676 900 19,260 - 20,160 Colgate-Palmolive Co. 48,555 1,039,077 - 1,087,632 - 27,690 - 27,690 Costco Wholesale Corp. - 896,325 - 896,325 590 - - 590 Danaher Corp. 33,542 - - 33,542 3,080 - 6,975 10,055 Dell Computer Corp. 72,411 - 163,982 236,393 500 - - 500 eBay, Inc. 26,405 - - 26,405 510 - - 510 Electronic Arts, Inc. 33,640 - - 33,640 800 - - 800 EMC Corp. 3,656 - - 3,656 - - 5,325 5,325 Exxon Mobil Corp. - - 169,868 169,868 - 40,825 - 40,825 Fannie Mae - 2,430,720 - 2,430,720 - - 1,000 1,000 Fifth Third Bancorp - - 61,230 61,230 1,990 - - 1,990 First Data Corp. 55,620 - - 55,620 - 23,080 - 23,080 Fluor Corp - 564,075 - 564,075 1,080 - - 1,080 Forest Laboratories, Inc. 88,571 - - 88,571 1,180 - 5,300 6,480 Freddie Mac 65,962 - 296,270 362,232 - 56,965 - 56,965 Genentech, Inc. - 1,858,768 - 1,858,768 - 11,550 675 12,225 General Dynamics Corp. - 939,362 54,898 94,260 3,480 31,505 9,475 44,460 General Electric Co. 85,782 776,598 233,559 1,095,939 510 - - 510 Goldman Sachs Group, Inc. (The) 33,675 - - 33,675
2,230 13,955 1,175 17,360 Harley-Davidson, Inc. 103,583 648,210 54,579 806,372 1,210 - 2,950 4,160 HCA, Inc. 57,608 - 140,449 198,057 - 18,045 - 18,045 Heinz (H.J.) Co. - 602,162 - 602,162 460 63,685 3,475 67,620 Home Depot, Inc. (The) 12,006 1,662,178 90,697 1,764,881 - 37,935 - 37,935 Honeywell International, Inc. - 821,672 - 821,672 - - 1,775 1,775 IDEC Pharmaceuticals Corp. - - 73,698 73,698 570 - - 570 Illinois Tool Works, Inc. 33,248 - - 33,248 2,420 - 9,200 11,620 Intel Corp. 33,614 - 127,788 161,402 290 - 875 1,165 International Business 16,933 - 51,091 68,024 Machines Corp. 330 - - 330 Intuit, Inc. 15,025 - - 15,025 6 - - 6 J.M. Smucker Co. (The) 220 - - 220 - - 2,260 2,260 Jabil Circuit, Inc. - - 33,403 33,403 2,760 22,450 4,350 29,560 Johnson & Johnson 149,261 1,214,096 235,248 1,598,605 400 - - 400 KLA-Tencor Corp. 11,176 - - 11,176 1,220 - - 1,220 Kohl's Corp. 74,188 - - 74,188 - 303,930 - 303,930 Liberty Media Corp. Class A - 2,182,217 - 2,182,217 1,660 1,675 3,335 Lilly (Eli) & Co. 91,864 - 92,694 184,558 - 33,335 - 33,335 Linear Technology Corp. - 690,701 - 690,701 400 - 600 1,000 Lockheed Martin Corp. 25,868 - 38,802 64,670 2,300 - - 2,300 Lowes's Cos., Inc. 95,220 - - 95,220 - 19,055 - 19,055 Marsh & McLennan Cos., Inc. - 793,450 - 793,450 - - 2,075 2,075 Maxim Integrated Products, Inc. - - 51,377 51,377 400 - - 400 McGraw-Hill Cos., Inc. (The) 24,488 - - 24,488 - 20,470 - 20,470 McKesson Corp. - 579,915 - 579,915 1,180 - 2,875 4,055 Medtronic, Inc. 49,702 - 121,095 170,797 900 - - 900 Mellon Financial Corp. 23,337 - - 23,337 - - 2,150 2,150 Merck & Co., Inc. - - 98,277 98,277 - 47,250 - 47,250 Metro-Goldwyn-Mayer, Inc. - 564,637 - 564,637 600 34,900 - 35,500 MGM Mirage 22,380 1,301,770 - 1,324,150 1,470 - - 1,470 Microchip Technology, Inc. 30,061 - - 30,061 3,770 62,825 10,500 77,095 Microsoft Corp. 164,900 2,747,966 459,270 3,372,136 - 34,070 - 34,070 Morgan Stanley - 1,154,292 - 1,154,292 100 - - 100 Newell Rubbermaid, Inc. 3,087 - - 3,087 950 - - 950 Northrop Grumman Corp. 117,838 - - 117,838 320 - - 320 Novellus Systems, Inc. 6,659 - - 6,659 5,690 75,440 5,925 87,055 Oracle Corp. 44,724 592,958 46,571 684,253 1,400 - - 1,400 PeopleSoft, Inc. 17,318 - - 17,318 1,240 - - 1,240 Pepsi Bottling Group, Inc. (The) 29,016 - - 29,016 1,120 - 3,600 4,720 PepsiCo, Inc. 41,384 - 133,020 174,404 6,670 89,453 12,975 109,098 Pfizer, Inc. 193,563 2,595,926 376,535 3,166,024 990 - 1,750 2,740 Philip Morris Cos., Inc. 38,412 - 67,900 106,312 390 - - 390 Praxair, Inc. 19,933 - - 19,933 800 - 2,175 2,975 Procter & Gamble Co. (The) 71,504 - 194,402 265,906 500 - - 500 QLogic Corp. 13,020 - - 13,020 1,220 - - 1,220 Schlumberger Ltd. 46,921 - - 46,921 300 100,150 - 100,450 Schwab (Charles) Corp. (The) 2,610 871,305 - 873,915 1,230 20,205 - 21,435 SLM Corp. 114,562 1,881,894 - 1,996,456 - - 3,225 3,225 Starwood Hotels & Resorts - - 71,917 71,917 Worldwide, Inc. 620 - - 620 Stryker Corp. 35,712 - - 35,712 500 - - 500 Symantec Corp. 16,815 - - 16,815 1,570 - - 1,570 Sysco Corp. 44,572 - - 44,572 1,520 - 1,775 3,295 Target Corp. 44,870 - 52,398 97,268 2,110 - - 2,110 Tenet Healthcare Corp. 104,445 - - 104,445 930 27,195 3,475 31,600 Texas Instruments, Inc. 13,736 401,670 51,326 466,732 1,040 - - 1,040 TJX Cos., Inc. (The) 17,680 - - 17,680 2,200 - - 2,200 Tyco International Ltd. 31,020 - - 31,020 390 - - 390 United Parcel Service, 24,387 - - 24,387 Inc. Class B 780 - 855 1,635 UnitedHealth Group, Inc. 68,032 - 74,573 142,605 - - 2,350 2,350 Univision Communications, - - 53,580 53,580 Inc. Class A - 13,995 - 13,995 USA Interactive - 271,223 - 271,223 3,020 - - 3,020 VERITAS Software Corp. 44,303 - - 44,303 - - 2,360 2,360 Verizon Communications, Inc. - - 64,758 64,758 2,650 64,770 2,600 70,020 Viacom, Inc. Class B 107,457 2,626,424 105,430 2,839,311 1,460 - - 1,460 Walgreen Co. 44,910 - - 44,910 - 35,925 - 35,925 Walgreen Co. - 1,105,053 - 1,105,053 2,820 - 5,175 7,995 Wal-Mart Stores, Inc. 138,857 - 254,817 393,674 - 26,855 - 26,855 Washington Mutual, Inc. - 845,127 - 845,127 Weight Watchers - 18,835 - 18,835 International, Inc. - 816,686 - 816,686 - 28,490 - 28,490 WellPoint Health Networks, Inc. - 2,088,317 - 2,088,317 - 14,995 4,875 19,870 Wyeth - 476,841 155,025 631,866 1,310 - 2,300 3,610 Xilinx, Inc. 20,748 - 36,427 57,175 1,470 - - 1,470 Yum! Brands, Inc. 40,734 - - 40,734 ----------- ----------- ----------- -----------
TOTAL COMMON STOCKS 4,255,874 50,720,108 5,798,709 60,774,691 ----------- ----------- ----------- ----------- FOREIGN COMMON STOCKS--4.0% 500 - - 500 ACE Ltd. (Bermuda) 14,805 - - 14,805 910 - - 910 Alcon, Inc. (Switzerland) 35,263 - - 35,263 - 71,575 - 71,575 ASML Holding NV (Netherlands) - 443,049 - 443,049 2,010 - - 2,010 Diageo plc (United Kingdom) 24,940 - - 24,940 1,700 - - 1,700 Encana Corp. (Canada) 51,170 - - 51,170 Flextronics International - 101,680 - 101,680 Ltd. (Singapore) - 708,913 - 708,913 3,067 - - 3,067 News Corp. Ltd. (The) 14,648 - - 14,648 (Australia) - 93,995 - 93,995 Nokia Oyj ADR (Finland) - 1,245,434 - 1,245,434 80 - - 80 SAP AG (Germany) 3,558 - - 3,558 4,404 - - 4,404 Taiwan Semiconductor 27,965 - - 27,965 Manufacturing Co. Ltd. ADR (Taiwan) 500 - - 500 Teva Pharmaceutical 33,500 - - 33,500 Industries Ltd. ADR (Israel) 1,420 - - 1,420 Unilever plc (United Kingdom) 12,885 - - 12,885 260 - - 260 XL Capital Ltd. Class A 19,110 - - 19,110 (Bermuda) ----------- ----------- ----------- ----------- TOTAL FOREIGN COMMON 237,844 2,397,396 - 2,635,240 STOCKS ----------- ----------- ----------- ----------- ($000) ($000) ($000) ($000) AGENCY MORTGAGE-BACKED SECURITIES-- 0.1% -------- -------- -------- -------- - 65 - 65 Fannie Mae 4.75%, 11/14/03 - 67,256 - 67,256 ----------- ----------- ----------- ----------- TOTAL AGENCY MORTGAGE- - 67,256 - 67,256 BACKED SECURITIES ----------- ----------- ----------- ----------- CORPORATE BONDS--0.1% - 15 - 15 Anheuser Busch 6%, 4/15/11 - 16,828 - 16,828 - 66 - 66 Lyondell Chemical, Inc. - 61,215 - 61,215 Series A 9.625%, 5/1/07 ----------- ----------- ----------- ----------- TOTAL CORPORATE BONDS - 78,043 - 78,043 ----------- ----------- ----------- ----------- CONVERTIBLE BONDS--0.1% - 98 - 98 Clear Channel Communications, - 95,795 - 95,795 Inc. 2.625%, 4/1/03 ----------- ----------- ----------- ----------- TOTAL CONVERTIBLE BONDS - 95,795 - 95,795 ----------- ----------- ----------- ----------- SHORT-TERM OBLIGATIONS--2.9% - 1,000 - 1,000 Citicorp 1.90%, 10/1/02 - 1,000,000 - 1,000,000 143 - - 143 Fannie Mae 1.86%, 10/1/02 143,000 - - 143,000 - - 776 776 State Street Bank & Trust Co. - - 776,000 776,000 repurchase agreement, 0.25% dated 9/30/02 due 10/1/02, repurchase price $776,005 collateralized by U.S. Treasury Bond 7.25%, 5/15/16, market value $795,000 ----------- ----------- ----------- ----------- TOTAL SHORT-TERM 143,000 1,000,000 776,000 1,919,000 OBLIGATIONS ----------- ----------- ----------- ----------- TOTAL INVESTMENTS--99.5% (Identified cost $4,997,612, $81,008,135, $7,693,412 and $93,699,159) 4,636,718 54,358,598 6,574,709 65,570,025 Other assets and (80,454) 611,575 (221,593) 309,528 liabilities, net--0.5% ----------- ----------- ----------- ----------- NET ASSETS--100.0% $ 4,556,264 $54,970,173 $6,353,116 $65,879,553 =========== =========== =========== =========== See Notes to Pro Forma Financial Statements
Phoenix-MFS Investor Growth Stock Series/Phoenix-Janus Growth Series/Phoenix-Van Kampen Focus Equity Series Pro Forma Combining Statement of Assets and Liabilities September 30, 2002 (Unaudited) =========== ============= ============== ============ ============ Phoenix-MFS Phoenix-Janus Phoenix-Van Pro Forma Investor Growth Series Kampen Focus Combining Growth Stock Equity Series Adjustments Portfolios Series =========== ============= ============== ============ ============ ASSETS Investment securities at value (Identified cost) $4,636,718 $ 54,358,598 $ 6,574,709 $ 65,570,025 $4,997,612, $81,008,135, $7,693,412 and $93,699,159) Cash 1,332 90,684 274 92,290 Receivables - Investment securities 64,821 981,975 187,429 1,234,225 sold Fund shares sold - - - - Interest and dividends 2,902 39,950 6,000 48,853 Receivable from adviser 13,182 - 4,144 17,326 Prepaid expenses - - - - ---------- ------------- ------------- ------------ ------------- Total assets 4,718,955 55,471,207 6,772,557 66,962,719 ---------- ------------- ------------- ------------ ------------- LIABILITIES Payables Investment securities 126,613 349,414 318,721 794,748 purchased Fund shares - - - - repurchased Investment advisory fee - 40,490 - 40,490 Financial agent fee 3,741 7,746 3,877 15,364 Trustees' fee 2,648 1,677 3,111 7,437 Accrued expenses 29,689 101,706 93,732 225,127 ---------- ------------- ------------- ------------ ------------- Total liabilities 162,691 501,034 419,441 1,083,165 ---------- ------------- ------------- ------------ ------------- NET ASSETS $4,556,264 $ 54,970,173 $ 6,353,116 $ 65,879,554 ========== ============= ============== ============ ============= Shares of beneficial 607,420 11,531,386 1,220,839 460,260 (a) 13,819.904 interest outstanding Net assets $4,556,264 $ 54,970,173 $ 6,353,116 $ 65,879,554 Net asset value per $ 7.50 $ 4.77 $ 5.20 $ 4.77 share (a) Adjustment reflects additional shares issued in conversion. See Notes to Pro Forma Financial Statements
Phoenix-MFS Investor Growth Stock Series/Phoenix-Janus Growth Series/Phoenix-Van Kampen Focus Equity Series Pro Forma Combining Statement of Operations October 1, 2001 through September 30, 2002 (Unaudited) =========== ========== ============= ============ ========= Phoenix-MFS Phoenix- Phoenix-Van Investor Janus Kampen Growth Growth Focus Equity Stock Series Series Series Adjustments Pro Forma For the For the For the Combining period Ended Year Ended Year Ended Portfolios September 30, September 30, September 30, 2002 2002 2002 =========== ============ ============= ============ ========= INVESTMENT INCOME Interest $ 4,931 $ 51,984 $ 1,113 $ - $ 58,028 Dividends 31,186 549,019 67,892 - 648,097 Foreign Taxes Withheld (310) (5,008) - - (5,318) ----------- ---------- ------------- ------------ --------- Total investment income 35,807 595,995 69,005 - 700,807 ----------- ---------- ------------- ------------ --------- EXPENSES Investment advisory fee 31,873 589,923 66,970 (77,586) 611,180 Financial agent fee 43,626 96,342 46,456 (74,556) 111,867 Printing 20,702 22,106 37,830 (4,941) (a) 75,697 Professional 50,422 32,936 38,910 (79,913) (a) 42,354 Custodian 41,682 19,316 23,956 (33,398) (a) 51,556 Trustees 7,656 5,862 5,939 (10,777) (a) 8,680 Miscellaneous 5,237 8,572 5,896 - (a) 19,704 ----------- ---------- ------------- ------------ --------- Total expenses 201,198 775,054 225,957 (281,171) 921,038 Custodian fees paid (9) (878) (13) - (900) indirectly Less expenses borne by (159,813) (40,054) (142,674) 213,053 (129,488) investment advisor ----------- ---------- ------------- ------------ --------- Net expenses 41,376 734,122 83,270 (68,118) 790,651 ----------- ---------- ------------- ------------ --------- NET INVESTMENT INCOME (LOSS) (5,569) (138,127) (14,266) 68,118 (89,844) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on (1,055,239) (15,827,548) (2,161,755) - (19,044,542) securities Net realized gain (loss) on 141 172 - 313 foreign currency Net change in unrealized (360,885) (3,450,861) 30,215 - (3,781,532) appreciation (depreciation) on investments Net gain (loss) on (1,415,984) (19,278,237) (2,131,540) - (22,825,761) investments ----------- ----------- ------------- ------------ ---------- NET INCREASE (DECREASE) IN $ (1,421,554) $ (19,416,365) $ (2,145,805) $ 68,118 $ (22,915,605) NET ASSETS RESULTING FROM OPERATIONS =========== =========== ============ ============ ========== Adjustments: (a) Reflects elimination of target fund contracts. Note: The expenses for Phoenix MFS Investors Growth are based on the expense schedule which became effective 6/1/02. See Notes to Pro Forma Financial Statements.
PHOENIX-JANUS GROWTH SERIES / MFS INVESTORS GROWTH SERIES / PHOENIX-VAN KAMPEN FOCUS EQUITY SERIES NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS SEPTEMBER 30, 2002 (UNAUDITED) 1. BASIS OF COMBINATION The unaudited Pro Forma Combined Portfolio of Investments, Pro Forma combined Statement of Assets and Liabilities, and Pro Forma Combined Statement of Operations give effect to the proposed merger of the Phoenix-MFS Investors Growth Series ("MFS Investors Growth"), and Phoenix-Van Kampen Focus Equity Series ("Van Kampen Focus Equity") into the Phoenix-Janus Growth Series ("Janus Growth"). The proposed merger will be accounted for by the method of accounting for tax-free mergers of investment companies. The merger provides for the transfer of all or substantially all of the assets of MFS Investors Growth and Van Kampen Focus Equity to Janus Growth and the subsequent liquidation of MFS Investors Growth and Van Kampen Focus Equity. The accounting survivor in the proposed merger will be Janus Growth. This is because although MFS Investors Growth and Van Kampen Focus Equity have similar investment objectives, the surviving fund will invest in a style that is similar to the way in which Janus Growth is currently operated. Additionally, Janus Growth has a significantly larger asset base than MFS Investors Growth and Van Kampen Focus Equity. The pro forma combined statements should be read in conjunction with the historical financial statements of the constituent fund and the notes thereto incorporated by reference in the Registration Statement filed on Form N-14. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates. MFS Investors Growth, Van Kampen Focus Equity and Janus Growth are all open-end management investment companies registered under the Investment Company Act of 1940, as amended. 2. SHARES OF BENEFICIAL INTEREST The Pro Forma net asset value per share assumes the issuance of additional shares of Janus Growth, which would have been issued at September 30, 2002 in connection with the proposed reorganization. The amount of additional shares assumed to be issued was calculated based on the net assets, as of September 30, 2002, of MFS Investors Growth of $4,556,264 and Van Kampen Focus Equity of $6,353,116 and the net asset value of Janus Growth of $4.77. The Pro Forma Statement of Assets & Liabilities reflects the combined Pro Forma shares outstanding as calculated above. 3. PRO FORMA OPERATIONS Pro Forma operating expenses include the expenses of Janus Growth restated to reflect the expense schedule which became effective May 1, 2002, the actual expenses of MFS Investors Growth, Van Kampen Focus Equity and the combined Fund, with certain expenses adjusted to reflect the expected expenses of the combined entity. The investment advisory and financial agent fees have been calculated for the combined Fund based on the fee schedule in effect for MFS Investors Growth at the combined level of average net assets for the period ended September 30, 2002. 4. PORTFOLIO VALUATION Equity securities are valued at the last sale price, or if there had been no sale that day, at the last bid price. Debt securities are valued on the basis of broker quotations or valuations provided by a pricing service which utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities in determining value. Short-term investments having a remaining maturity of 60 days or less are valued at amortized cost which approximates market. All other securities and assets are valued at fair value as determined in good faith by or under the direction of the Trustees. PART C OTHER INFORMATION ITEM 15. INDEMNIFICATION The response to this item is incorporated by reference to Part A of the Prospectus/Proxy Statement in this Registration Statement under the caption "Comparative Information on Shareholder Rights-Liability of Trustees." ITEM 16. EXHIBIT (1) Amended Declaration of Trust. 1. Declaration of Trust of the Registrant dated February 18, 1986, previously filed with the Registration Statement on Form N-1A on April 18, 1986 and filed via Edgar with Post-Effective Amendment No. 18 on June 20, 1996. 2. Amendment to Declaration of Trust, establishing the International Series, previously filed with Post-Effective Amendment No. 7 on March 2, 1992 and filed via Edgar with Post-Effective Amendment No. 20 on April 29, 1997. 3. Amendment to Declaration of Trust, conforming the Fund's borrowing restrictions to California's Borrowing Guidelines, previously filed with Post-Effective Amendment No. 7 on March 2, 1992 and filed via Edgar with Post-Effective Amendment No. 20 on April 29, 1997. 4. Amendment to Declaration of Trust, establishing the Balanced Series, previously filed with Post-Effective Amendment No. 8 on April 28, 1992 and filed via Edgar with Post-Effective Amendment No. 20 on April 29, 1997. 5. Amendment to Declaration of Trust, establishing the Real Estate Securities Series, previously filed with Post-Effective Amendment No. 12 on February 16, 1995 and filed via Edgar with Post-Effective Amendment No. 20 on April 29, 1997. 6. Amendment to Declaration of Trust, establishing the Strategic Theme Series, previously filed via Edgar with Post-Effective Amendment No. 16 on January 29, 1996. 7. Amendment to Declaration of Trust, changing the name of the Series currently designated "Bond Series" to the "Multi-Sector Fixed Income Series," previously filed via Edgar with Post-Effective Amendment No. 17 on April 17, 1996. 8. Amendment to Declaration of Trust, establishing the Aberdeen New Asia Series, previously filed via Edgar with Post-Effective Amendment No. 19 on September 3, 1996. 9. Amendment to Declaration of Trust, establishing the Research Enhanced Index Series, previously filed via Edgar with Post-Effective Amendment No. 22 on July 15, 1997. 2 10. Amendment to Declaration of Trust, establishing five new Series previously filed via Edgar with Post-Effective Amendment No. 25 on April 29, 1998. 11. Amendment to Declaration of Trust, establishing the Phoenix-Bankers Trust Dow 30, Phoenix-Federated U.S. Government Bond, Phoenix-Janus Equity Income, Flexible Income and Growth and Phoenix-Morgan Stanley Focus Equity Series, previously filed via Edgar with Post-Effective Amendment No. 35 on November 15, 2000. 12. Amendment to Declaration of Trust, changing names of 4 Series to the Phoenix-Engemann Capital Growth, Phoenix-Seneca Strategic Theme, Phoenix-Oakhurst Balanced, Phoenix-Oakhurst Strategic Allocation Series, previously filed via Edgar with Post-Effective Amendment No. 35 on November 15, 2000. 13. Amendment to Declaration of Trust, establishing the Phoenix-Bankers Trust Nasdaq-100(R) Index and Phoenix-Engemann Small & Mid-Cap Growth Series, previously filed via Edgar with Post-Effective Amendment No. 35 on November 15, 2000. 14. Amendment to Declaration of Trust, establishing the Phoenix-Sanford Bernstein Global Value and Phoenix-Sanford Bernstein Small-Cap Value Series, previously filed via Edgar with Post-Effective Amendment No. 35 on November 15, 2000. 15. Amendment to Declaration of Trust, changing the name of 1 Series to the Phoenix-Sanford Bernstein Mid-Cap Value Series, previously filed via Edgar with Post-Effective Amendment No. 35 on November 15, 2000. 16. Form of Amendment to Declaration of Trust establishing the Phoenix-AIM Mid-Cap Equity, Phoenix-Alliance/Bernstein Growth + Value, Phoenix-MFS Investors Growth Stock, Phoenix-MFS Investors Trust and Phoenix-MFS Value Series, previously filed via Edgar with Post-Effective Amendment No. 38 on August 13, 2001. 17. Amendment to Declaration of Trust amending the fundamental investment restrictions of each series, previously filed via Edgar with Post-Effective Amendment No. 41 on March 1, 2002. 18. Amendment to Declaration of Trust amending Article IV, Section 4.2 Establishment and Designation of Shares, previously filed via Edgar with Post-Effective Amendment No. 42 on April 29, 2002. 19. Amendment to Declaration of Trust for the purposes of changing the name "Phoenix-Morgan Stanley Focus Equity Series" to "Phoenix-Van Kampen Focus Equity Series", previously filed via Edgar with Post-Effective Amendment No. 43 on May 24, 2002. 20. Amendment to Declaration of Trust, establishing the Phoenix-Kayne Large-Cap Core, Phoenix-Kayne Small-Cap Quality Value, Phoenix-Lord Abbett Large-Cap Value, Phoenix-Lord Abbett Mid-Cap Value, Phoenix-Lord Abbett Bond-Debenture, Phoenix- 3 Lazard International Equity Select, Phoenix-Lazard Small-Cap Value, Phoenix-Lazard U.S. Multi-Cap, and Phoenix-State Street Research Small-Cap Growth Series.* 21. Amendment to Declaration of Trust for the purpose of substituting shares of an outside managed fund for shares of Phoenix-Federated U.S. Government Bond Series and through substitution, no longer allowing investments, filed herewith. (2) Not Applicable. (3) Not Applicable. (4) Agreements and Plans of Reorganization (included as Appendix A and Appendix B to the Prospectus/Proxy Statement contained in Part A of this Registration Statement). (5) Reference is hereby made to Registrant's Amended Declaration of Trust referenced in Exhibit 1 above. (6) (a) Investment Advisory Agreements. (1) Investment Advisory Agreement between Registrant and Phoenix Variable Advisors, Inc., covering the Phoenix-Bankers Trust Dow 30, the Phoenix-Federated U.S. Government Bond, the Phoenix-Janus Equity Income, the Phoenix-Janus Flexible Income, Phoenix-Janus Growth, the Phoenix-Morgan Stanley Focus Equity, the Phoenix Research Enhanced Index, and the Phoenix-Schafer Mid-Cap Value Series, filed via Edgar with Post-Effective Amendment 30 on April 28, 2000. (2) First Amendment to Investment Advisory Agreement between Registrant and Phoenix Variable Advisors, Inc., covering the Phoenix-Bankers Trust Nasdaq-100 Index(R) Series, previously filed via Edgar with Post-Effective Amendment 31 on June 9, 2000. (3) Second Amendment to Investment Advisory Agreement between Registrant and Phoenix Variable Advisors, Inc., covering the Phoenix-Sanford Bernstein Global Value and Phoenix-Sanford Bernstein Small-Cap Value Series, previously filed via Edgar with Post-Effective Amendment No. 35 on November 15, 2000. (4) Third Amendment to Investment Advisory Agreement between Registrant and Phoenix Variable Advisors, Inc., covering the Phoenix-AIM Mid-Cap Equity, Phoenix-Alliance/Bernstein Growth + Value, Phoenix-MFS Investors Growth Stock, Phoenix-MFS Investors Trust, and Phoenix-MFS Value Series, previously filed via Edgar with Post-Effective Amendment No. 38 on August 13, 2001. (5) Fourth Amendment to Investment Advisory Agreement between Registrant and Phoenix Variable Advisors, Inc., covering the Phoenix-Lazard International 4 Equity Select, Phoenix-Lazard Small-Cap Value, Phoenix-Lazard U.S. Multi-Cap, Phoenix-Lord Abbett Bond-Debenture, Phoenix-Lord Abbett Large-Cap Value, Phoenix-Lord Abbett Mid-Cap Value, and Phoenix-State Street Research Small-Cap Growth Series, previously filed via Edgar with Post-Effective Amendment No. 43 on May 24, 2002. (b) Subadvisory Agreements. (1) Subadvisory Agreement among Registrant, Phoenix Variable Advisors, Inc. and Morgan Stanley Investment Management, Inc., covering the Phoenix-Morgan Stanley Focus Equity Series, filed via Edgar with Post-Effective Amendment No. 29 on December 17, 1999. (2) Subadvisory Agreement between Phoenix Variable Advisors, Inc. and Massachusetts Financial Services Company, Inc. covering the Phoenix-MFS Investors Growth Stock, Phoenix-MFS Investors Trust, and Phoenix-MFS Value Series, previously filed via Edgar with Post-Effective Amendment No. 38 on August 13, 2001. (3) Amended and Restated Investment Subadvisory Agreement between Phoenix Variable Advisors, Inc. and Janus Capital Management, LLC, previously filed via Edgar with Post-Effective Amendment No. 43 on May 24, 2002. (7) Not Applicable. (8) Not Applicable. (9) Custodian Agreement. (a) Form of Custodian Agreement between Registrant and State Street Bank and Trust Company dated May 1, 1997 covering the Real Estate Securities and Enhanced Index Series, previously filed via Edgar with Post-Effective Amendment No. 23 on December 12, 1997. (b) Form of Amendment to the Master Custodian Contract between Registrant and State Street Bank and Trust Company, previously filed via Edgar with Post-Effective Amendment No. 42 on April 29, 2002. (c) Form of Amendment to the Master Custodian Contract between Registrant and State Street Bank and Trust Company, covering the Phoenix-Kayne Large-Cap Core, Phoenix-Kayne Small-Cap Quality Value, Phoenix-Lazard Small-Cap Value, Phoenix-Lazard U.S. Multi-Cap, Phoenix-Lord Abbett Bond-Debenture, Phoenix-Lord Abbett Mid-Cap Value, Phoenix-Lord Abbett Large-Cap Value, and Phoenix-State Street Research Small-Cap Growth Series, previously filed via Edgar with Post-Effective Amendment No. 44 on August 9, 2002. 5 (10) Not Applicable. (11) Opinion and Consent of Richard J. Wirth, Esq., filed herewith. (12) Opinion and Consent of McDermott, Will & Emery to be filed by amendment. (13) (a) Material Financial Agent Agreement between the Registrant and Phoenix Equity Planning Corporation dated December 11, 1996, previously filed via Edgar with Post-Effective Amendment No. 20 on April 29, 1997. (b) Material First Amendment to Financial Agent Agreement between the Registrant and Phoenix Equity Planning Corporation effective February 27, 1998, previously filed via Edgar with Post-Effective Amendment No. 25 on April 29, 1998. (c) Material Second Amendment to Financial Agent Agreement between the Registrant and Phoenix Equity Planning Corporation effective June 1, 1998, previously filed via Edgar with Post-Effective Amendment No. 41 on March 1, 2002. (d) Material Third Amendment to Financial Agent Agreement between the Registrant and Phoenix Equity Planning Corporation effective October 29, 2001, previously filed via Edgar with Post-Effective Amendment No. 41 on March 1, 2002. (e) Form of Administrative Services Agreement between the Registrant, Phoenix Life Insurance Company, PHL Variable Insurance Company and Phoenix Life and Annuity Company.* (14) Consent of PricewaterhouseCoopers LLP, filed herewith. (15) Not Applicable. (16) Power of Attorney dated August 9, 2002.* (17) (a) Form of Voting Instructions Card and Proxy Card for Phoenix-Van Kampen Focus Equity Series.* (b) Form of Voting Instructions Card and Proxy Card for Phoenix-Janus Growth Series.* (c) Current Prospectus of The Phoenix Edge Series Fund, as supplemented August 16, 2002 and October 25, 2002.* (d) Supplements dated December 6 and December 17, 2002 to current Prospectus of The Phoenix Edge Series Fund dated August 9, 2002, filed herewith. * Previously filed, via Edgar, with the Initial Registration Statement (No. 333-102098) on December 20, 2002. 6 Item 17. Undertakings (1) The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this Registration Statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act of 1933, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. (3) The undersigned Registrant agrees to file, by post-effective amendment, an Opinion of Counsel or a copy of an IRS ruling supporting the tax consequences of the Reorganization within a reasonable time after receipt of such opinion or ruling. 7 SIGNATURES ---------- Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed on behalf of the Registrant in the City of Hartford and State of Connecticut on the 23rd day of January, 2003. THE PHOENIX EDGE SERIES FUND Attest: /s/ Richard J. Wirth By: /s/ Simon Y. Tan ------------------------- --------------------- Richard J. Wirth Simon Y. Tan Secretary President As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on this 23rd day of January, 2003.
Signature Title - --------- ----- /s/Nancy G. Curtiss - ----------------------------------- Nancy G. Curtiss Treasurer (Principal Financial and Accounting Officer) - ----------------------------------- Frank M. Ellmer* Trustee - ----------------------------------- John A. Fabian* Trustee - ----------------------------------- Roger A. Gelfenbien* Trustee - ----------------------------------- Michael J. Gilotti* Trustee and Executive Vice President - ----------------------------------- Eunice S. Groark* Trustee - ----------------------------------- Frank E. Grzelecki* Trustee - ----------------------------------- John R. Mallin* Trustee
8
/s/Simon Y. Tan - ----------------------------------- Simon Y. Tan Trustee and President (Principal Executive Officer) *By:/s/ Simon Y. Tan ----------------
* Pursuant to powers of attorney, previously filed, via Edgar with the Initial Registration Statement (No. 333-102098) on Form N-14 on December 20, 2002. 9 EX-99 4 pesf58665ex1.txt AMENDMENT TO DECLARATION OF TRUST EX-99.1 Amendment to Declaration of Trust Exhibit 1 Amendment to Declaration of Trust THE PHOENIX EDGE SERIES FUND CERTIFICATE OF AMENDMENT TO DECLARATION OF TRUST THIS AMENDMENT, effective as of the 25th of October 2002, does hereby amend that certain Declaration of Trust dated February 18, 1986, as amended (the "Declaration") as follows: W I T N E S S E T H WHEREAS, Article VII, Section 7.2 of the Declaration permits the Trustees to amend the Declaration subject to the requisite vote of the Majority of the Outstanding Voting Securities of each Series; WHEREAS, on October 25, 2002 all shares of the Phoenix-Federated U.S. Government Bond Series held in the Account were redeemed at net asset value and the proceeds were used to purchase shares of the Federated Fund for U.S. Securities II; WHEREAS, as a result of the substitution, the Phoenix-Federated U.S. Government Bond Series is no longer available for investment; and WHEREAS, the undersigned Trustee, acting herein individually and pursuant to the Delegation and Power of Attorney dated August 9, 2002, attached hereto and made a part hereof, and in accordance with Article VII, Section 7.4 of the Declaration, does hereby intend to effect the foregoing modifications in accordance with Article VII, Section 7.3 of the Declaration. NOW, THEREFORE, Article IV, Section 4.2, is hereby deleted and the following is inserted in lieu thereof: SECTION 4.2 ESTABLISHMENT AND DESIGNATION OF SHARES. "Without limiting the authority of the Trustees set forth in Section 4.1 to establish and designate any further Series, the Series as more particularly described in the Trust's registration statement as most recently filed with the Securities and Exchange Commission are hereby established and designated." Except as hereinbefore and hereinabove modified, the Declaration shall be, and remain unamended and in full force and effect. IN WITNESS WHEREOF, I have hereunto set my hand this 25th day of October 2002. /s/ Simon Y. Tan ------------------------------------ Simon Y. Tan, individually and as attorney-in-fact for Michael J. Gilotti, Frank M. Ellmer, John A. Fabian, Roger A. Gelfenbien, Eunice S. Groark, Frank E. Grzelecki, John R. Mallin and Timothy P. Shriver EX-99.11 5 pesf58665ex11.txt OPINION AND CONSENT OF RICHARD J. WIRTH EX-99.11 Opinion and Consent of Richard J. Wirth Exhibit 11 Opinion and Consent of Richard J. Wirth January 23, 2003 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Ladies and Gentlemen: The undersigned serves as Counsel to Phoenix Life Insurance Company and its insurance company affiliates (collectively "Phoenix Life"). Shares of The Phoenix Edge Series Fund, a Massachusetts business trust (the "Trust") are issued to one or more designated separate accounts of Phoenix Life. In my capacity as Counsel, I have represented the Trust in connection with the preparation and filing of the Trust's Registration Statement on Form N-14 (the "Registration Statement") under the Securities Act of 1933. I am admitted to practice law in the State of Connecticut and am generally familiar with Massachusetts law applicable to this entity. This opinion is furnished in connection with the registration statement filed on December 20, 2002 with the Securities and Exchange Commission with respect to the shares of beneficial interest (the "Shares") of the Trust, representing interests in the Phoenix-Janus Growth Series, a series of the Trust, to be issued pursuant to certain Agreements and Plans of Reorganization (the "Reorganization Agreements") between the Trust and Phoenix-Van Kampen Focus Equity Series and Phoenix-MFS Investors Growth Stock Series, dated as of February 14, 2003, as described in the Registration Statement. In rendering my opinion, I have examined such documents, records and matters of law as I deemed necessary for purposes of this opinion. I have assumed the genuineness of all signatures of all parties, the authenticity of all documents submitted as originals, the correctness of all copies, and the correctness of all facts set forth in the certifications delivered to me and the correctness of all written and oral statements made to me. Based upon and subject to the foregoing, it is my opinion that the Shares that will be issued by the Trust, will, when sold, be legally issued, fully paid, and nonassessable. My opinion is rendered solely in connection with the Registration Statement on Form N-14 and it may not be relied upon for any other purposes without my written consent. I hereby consent to the use of this opinion as an exhibit to such Registration Statement. Very truly yours, /s/ Richard J. Wirth ------------------------------ Richard J. Wirth, Secretary The Phoenix Edge Series Fund EX-99.14 6 pesf58665ex14.txt CONSENT OF PRICEWATERHOUSECOOPERS LLP Exhibit 14 Consent of PricewaterhouseCoopers LLP CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the inclusion in this Registration Statement on Form N-14 (the "Registration Statement") of our report dated February 8, 2002, relating to the financial statements and financial highlights of The Phoenix Edge Series Fund appearing in the December 31, 2001 Annual Report to Shareholders, which is also included in the Registration Statement. We further consent to the reference to us under the headings "Management and Other Service Providers" and "Surviving Series Financial Highlights" in the Registration Statement. We also consent to the references to us under the heading "Financial Highlights" in the Prospectus of The Phoenix Edge Series Fund dated August 9, 2002 and under the headings "Financial Statements" and "Independent Accountants" in the Statement of Additional Information of The Phoenix Edge Series Fund dated August 9, 2002. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts January 21, 2003 EX-99.17D 7 pesf58665ex17d.txt SUPPLEMENTS TO CURRENT PROSPECTUS Exhibit 17(d) Supplements to Current Prospectus THE PHOENIX EDGE SERIES FUND SUPPLEMENT TO THE PROSPECTUS DATED AUGUST 9, 2002 ---------- The Board of Trustees of The Phoenix Edge Series Fund approved the subadvisory changes described below. The series investment objectives, principal investment strategies and principal risks will remain the same. The fees and expenses associated with the series will not increase as a result of these changes. ---------- Following the close of business on January 31, 2003, Northern Trust Investments, Inc., will replace Deutsche Asset Management, Inc., as subadvisor for the following series:
- -------------------------------------------------------------------------------------------------------------------- CURRENT SERIES NAME NEW SERIES NAME - -------------------------------------------------------------------------------------------------------------------- Phoenix-Deutsche Dow 30 Series Phoenix-Northern Trust Dow 30 Series Phoenix-Deutsche Nasdaq-100 Index(R) Series Phoenix-Northern Trust Nasdaq-100 Index(R) Series - --------------------------------------------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT - Northern Trust Investments, Inc. ("Northern Trust"), is the subadvisor to the series and is responsible for its day-to-day portfolio management. The entire portfolio management team has moved from Deutsche Asset Management, Inc., to Northern Trust. SUBADVISOR - Northern Trust Investments, Inc. ("Northern Trust"), serves as subadvisor to the series. Northern Trust's principal place of business is located at 50 LaSalle Street, Chicago, Illinois 60675. Northern Trust has been engaged in the investment management business since 1889, specializing in personal wealth and institutional money management. As of September 30, 2002, Northern Trust had approximately $293 billion in assets under management. ---------- Following the close of business on January 31, 2003, Alliance Capital Management L.P. will replace J.P. Morgan Investment Management Inc. as subadvisor for the following series:
- --------------------------------------------------------------------------------------------------------------------- CURRENT SERIES NAME NEW SERIES NAME - -------------------------------------------------------------------------------------------------------------------- Phoenix-J.P. Morgan Research Enhanced Index Series Phoenix-Alliance/Bernstein Enhanced Index Series - --------------------------------------------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT - Alliance Capital Management L.P. ("Alliance") is the subadvisor to the series and is responsible for its day-to-day portfolio management. You will find more information about PVA and Alliance in the "Management of the Fund" section of this prospectus. Day-to-day investment decisions for the series will be made by Bernstein's Investment Policy Group for Enhanced Markets, which is chaired by Steven Pisarkiewicz. Mr. Pisarkiewicz joined Bernstein in 1989 and assumed his current position as Chief Investment Officer for Enhanced Market Services in 1998. SUBADVISOR - Alliance Capital Management L.P., through its Bernstein Investment Research and Management Unit, ("Alliance") is the subadvisor to the Phoenix-Sanford Bernstein Global Value, Phoenix-Sanford Bernstein Mid-Cap Value, Phoenix-Sanford Bernstein Small-Cap Value, Phoenix-Alliance/Bernstein Growth + Value and also to the Phoenix-Alliance/Bernstein Enhanced Index Series. Alliance will manage the portion of the series' assets invested in value stocks through its Bernstein Investment Research and Management Unit. Alliance is a leading international investment advisor supervising client accounts with assets as of October 31, 2002, totaling approximately $382 billion. The Bernstein Investment Research and Management Unit services the former investment research and management business of Sanford C. Bernstein & Co., Inc., a registered investment advisor and broker/dealer acquired by Alliance in October 2000 that managed value-oriented investment portfolios since 1967. Alliance is located at 1345 Avenue of the Americas, New York, New York 10105. Dated: December 6, 2002 Please keep this supplement for future reference. THE PHOENIX EDGE SERIES FUND ---------------------------- SUPPLEMENT TO THE PROSPECTUS DATED AUGUST 9, 2002 The Board of Trustees of The Phoenix Edge Series Fund (the "Fund") has approved a Plan of Reorganization to merge a series of the Fund into an existing series of the Fund. The merged series will be incorporated into a corresponding surviving series as follows:
- --------------------------------------------------------------------------------------------------------------- MERGED SERIES SURVIVING SERIES - --------------------------------------------------------------------------------------------------------------- o Phoenix-Aberdeen New Asia Series o Phoenix-Aberdeen International Series - ---------------------------------------------------------------------------------------------------------------
If shareholders approve the Plan of Reorganization, the merged series will transfer all or substantially all of its assets and its liabilities to the corresponding surviving series as shown above. In exchange, shareholders of the merged series will receive a proportional number of shares in the surviving series. The shareholders of the merged series must approve the Plan of Reorganization before any transaction can take place. We expect the next meeting of the Fund's shareholders to be held on or about January 27, 2003 and we will submit these matters for a shareholder vote at that time. Those shareholders eligible to vote will receive voting instructions and information by mail. DATED: DECEMBER 6, 2002 PLEASE KEEP THIS SUPPLEMENT FOR FUTURE REFERENCE. THE PHOENIX EDGE SERIES FUND SUPPLEMENT TO THE PROSPECTUS DATED AUGUST 9, 2002 The Executive Committee of the Board of Trustees of The Phoenix Edge Series Fund (the "Fund") has approved a Plan of Reorganization to merge two series of the Fund into other existing series of the Fund. We expect that the Board of Trustees will ratify the Executive Committee's decision at the next Board of Trustees meeting on February 10, 2003.
- --------------------------------------------------------------------------------------------------------------- MERGED SERIES SURVIVING SERIES - --------------------------------------------------------------------------------------------------------------- o Phoenix-MFS Investors Growth Stock Series o Phoenix-Janus Growth Series o Phoenix-Van Kampen Focus Equity Series o Phoenix-Janus Growth Series - ---------------------------------------------------------------------------------------------------------------
If shareholders approve the Plan of Reorganization, each merged series will transfer all or substantially all of its assets and its liabilities to the corresponding surviving series as shown above. In exchange, shareholders of the merged series will receive a proportional number of shares in the surviving series. The shareholders of each merged series must approve the Plan of Reorganization before any transaction can take place. We expect the meeting of the Fund's shareholders to be held on or about February 14, 2003 and we will submit these matters for a shareholder vote at that time. Those shareholders eligible to vote will receive voting instructions and information by mail. DATED: DECEMBER 17, 2002 PLEASE KEEP THIS SUPPLEMENT FOR FUTURE REFERENCE. -----END PRIVACY-ENHANCED MESSAGE-----